Farm exports to hit most if US decides on reciprocal tariffs

Indian farm exports will be hit the most if the US decides on uniform reciprocal tariffs with shrimp, dairy and processed foods facing import duties of up to 38.2 per cent, per an analysis by research body Global Trade and Research Initiative (GTRI).

In the industrial goods sector, pharmaceuticals diamonds & jewellery, and electronics may face major risks, with tariffs ranging from 7.2 per cent to 13.3 per cent, it said. Petroleum, minerals and garments may be the least affected due to existing US tariffs, the report noted.

The think-tank suggested that India should propose a ‘zero-for-zero’ tariff strategy to the US for addressing America’s proposed reciprocal tariff hikes as it would be less harmful than negotiating a full bilateral trade agreement.

“For this, India needs to identify tariff lines where it can eliminate tariffs for US imports without harming domestic industries and agriculture. We may exclude most agriculture lines from this list,” the report said. To prepare such a list, India can refer to its FTA tariff offers to Japan, Korea, and ASEAN as a starting point. “This list should be discussed with the US before April, ahead of its reciprocal tariff announcement. It will be like doing a quick goods FTA and if the US accepts, reciprocal tariff may be very low or near zero for India,” it said.

In April this year, US President Donald Trump is expected to come up with announcements on reciprocal tariffs on products imported from countries with which the US has a trade deficit. Naming India as one of the countries’ that would be targetted, Trump said that he would match the high tariffs that are charged by these countries on imports.

“The good news is that the actual import tariffs on US exports to India are significantly lower than often claimed. If the US adopts a fair trade approach, Indian industries can continue exporting to the US with minimal disruptions, fostering a more balanced and stable trade relationship,” the report stated.

India’s simple average tariff rate stands at 17 per cent, compared to the US’ 3.3 per cent, per WTO figures. A fact sheet put out by the US White House stated that while the US average applied Most Favoured Nation (MFN) tariff on agricultural goods was 5 per cent, India’s average applied MFN tariff was 39 per cent.

Source : Dairynews7x7 Feb 22nd 2025 The Hindu Businessline