The Trump administration’s sweeping new tariffs on world commerce companions, together with a 27 per cent responsibility on imports from India, are set to hit key sectors, from diamonds and smartphones to photo voltaic PV modules and attire. Whereas the chief order signed on April 2 permits exemptions for sure vital minerals, vitality merchandise, and prescription drugs, a more in-depth take a look at the tariff strains and India’s high 100 exports signifies restricted reduction.
Amongst them, solely exports of petroleum oils derived from bituminous minerals (excluding crude), price $4.4 billion in 2023-24, stand to profit. Notably, none of India’s high pharma exports to the US, which totalled $8 billion in FY24, qualify for exemption below the administration’s “discounted reciprocal tariffs”.
The most recent tariffs additionally exclude articles of metal and aluminum, and vehicles and automotive elements, on which tariffs had been introduced earlier by the second Trump administration.
Pharma exports unlikely to achieve from exemptions
Most of India’s high pharma exports to the US, together with omeprazole, lansoprazole, sure gastrointestinal and anticancer medication, phenytoin, and phenobarbitone, don’t determine within the checklist of exemptions.
Nonetheless, for the reason that 27 per cent tariff introduced on India, efficient April 9, is considerably lesser or similar to these introduced on different key pharma exporters in Asia, like China (34 per cent) and Japan (24 per cent), there may very well be some reduction for home exporters.
“We are going to brainstorm and focus on with our counterparts within the US shortly. Any type of tariff imposed might be handed on to the top person. Indian exporters may have issues initially, however finally the tariff might be handed on to them,” a senior pharma consultant instructed The Indian Specific.
Attire exports may very well be the massive gainer
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India’s attire exports to the US, exceeding $7 billion in FY24, are additionally set to be impacted. Nonetheless, the 46 per cent tariff on Vietnam and the 37 per cent tariff on Bangladesh, is probably going to provide Indian exporters a aggressive edge.
“Regardless of the steep hike of tariff for India, it prima facie appears to be a case of India benefit for the Attire sector, with our main competing international locations like China, Bangladesh, Vietnam, Cambodia, and Sri Lanka having been slapped greater reciprocal tariffs by USA,” Mithileshwar Thakur, secretary common of the Attire Export Promotion Council (APEC) mentioned.
“The present Trump Tariff, nevertheless, gives tariff- based mostly edge to Brazil, Turkey & different attire exporting EU international locations like Italy, Germany and Spain. However, given the intrinsic power of Indian attire sector by way of presence of all the worth chain and the spectacular vary of its choices, my preliminary evaluation is that it’ll work out in India’s favour finally and we must always gear ourselves to encash this chance,” Thakur added.
Greater tariff on Vietnam may enhance smartphones, photo voltaic modules exports
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The brand new tariffs may even hit India’s diamond exports to the US, which surpassed $9 billion in FY24, together with smartphone shipments price over $5 billion and photo voltaic PV modules valued at round $2 billion. With the US being a key marketplace for each smartphones and photo voltaic modules, the upper duties pose a big problem. Nonetheless, given Vietnam’s sturdy presence in each sectors, the tariff differential may supply India a aggressive edge.
In late March, the Trump administration had introduced a 25 per cent tariff on vehicles and auto elements, set to take impact from April 3. The tariffs solid uncertainty over India’s $7 billion auto element exports to the US and their future progress in North America.
Earlier, it had additionally introduced a 25 per cent tariff on articles of metal and aluminum efficient March 12. Whereas the US ranked solely sixth amongst locations for India’s iron and metal exports — valued at $476 million in FY24 — it was the biggest marketplace for iron and metal articles, with exports touching $2.8 billion in the identical interval.
The 25 per cent tariff on aluminum imports can also be anticipated to influence Indian exporters, because the US stays their largest abroad marketplace for aluminum merchandise. In FY24, India exported aluminum articles price $946 million to the US, following two consecutive years of exports exceeding $1 billion.