Tariffs War: Donald Trump’s new tariffs on several countries, including India, now in effect, with a combined 104% duty on China

New Delhi| US President Donald Trump’s new tariffs came into full force after midnight on Wednesday. Trump had announced retaliatory tariffs on April 2. He had announced that the US would now impose a minimum tariff of 10 per cent on almost all its trading partners. It will impose higher tariffs on countries that charge it very high tariffs. The 10 per cent baseline had already come into effect on Saturday. After this, Trump’s high import tax rates on dozens of countries came into effect at midnight. Under this, 26 percent tariff has now become effective on India.

Trump has announced to impose the highest tariff up to 50 percent. The highest tariffs have been imposed on small economies that do little trade with the US, such as the African country Lesotho. In addition tariffs of 47% have been imposed on imports from Madagascar, 46% on Vietnam, 32% on Taiwan, 25% on South Korea, 24% on Japan and 20% on the European Union.

Meanwhile, last week, Trump announced a 34% tariff on China. This was in addition to the 20% duty imposed earlier this year. Trump had since threatened to add a 50% duty on Chinese goods following a recent counterattack by Beijing. This would lead to a total tariff of 104 per cent being imposed on China by the US.

What is tariff?
This is the customs duty or import duty imposed on the import of goods, which has to be paid by the importer to the government. Generally companies pass these on to users. In other words, it affects the pockets of common people only.

What is counter tariff?
This fee is levied in response to an increase or higher fee being charged by trading partners. That means, in a way, there is a tit-for-tat retaliatory step.

How much fee on India?
There is already a 25% duty on steel, aluminum and vehicles and parts. The remaining products will incur a basic (baseline) duty of 10% between 5 and 8 April and increased to 26% from 9 April.

What is America’s intention?
This will increase domestic manufacturing in America. America has a huge trade imbalance with some countries, especially China. The US trade deficit with India in 2023-24 was US$35.31 billion.

Which sectors are exempted?
According to an analysis, apart from medicines, semiconductors, copper, energy products like oil, gas, coal, LNG have been kept out of its scope.

What a big challenge is this for India?
Experts believe that India’s situation is better than its competing countries. India may get an opportunity to increase its role in the global supply chain. But for this it will have to make business easier, invest in logistics and infrastructure.

How beneficial will the trade agreement with America be?
PM Narendra Modi, during his visit to the US in February, had announced an increase in bilateral trade to $500 billion by 2030. In such agreements, trading partners either reduce customs duties significantly or eliminate them on most goods. The criteria for promoting services and investment are also eased.

How much do other countries charge?
China was charged 104%, Vietnam 46%, Bangladesh 37% and Thailand 36%.

Is the tariff in line with WTO?
These duties clearly violate WTO rules. This is also against MFN (preferential nation) obligations and bound rate commitments. Member countries have every right to approach the WTO’s dispute settlement mechanism against them.

America-India are the largest trading partners
The US was India’s largest trading partner from FY 2021-22 to 2023-24. The US accounts for about 18% of India’s total merchandise exports, 6.22% of imports and 10.73% of bilateral trade. India’s trade surplus (difference in imports and exports) with the US was US$35.32 billion in 2023-24. It stood at 27.7 billion in 2022-23, 32.85 billion in 2021-22, 22.73 billion in 2020-21 and US$17.26 billion in 2019-20.