LIVE: Senate rebukes Trump tariffs; China vows to retaliate as markets nosedive
India's tariff is 27 pc, not 26 pc; MoS for Finance Pankaj Chaudhary says Centre assessing impact; pharma sector exempted in big relief
India is assessing the 26 per cent tariff hike imposed by the US and its impact on the country, Minister of State for Finance Pankaj Chaudhary said on Thursday (April 3).
"For (Donald) Trump, it's America first but for (Prime Minister Narendra) Modi, it's India first. We are assessing the impact of reciprocal tariffs imposed by the US," he said on the sidelines of an event.
US President Donald Trump on Wednesday (April 2) announced far-reaching new tariffs on nearly all US trading partners — a 34 per cent tax on imports from China and 20 per cent on the European Union, among others — that threaten to dismantle much of the architecture of the global economy and trigger broader trade wars. India has got 26 per cent but key sectors such as pharmaceuticals have been spared.
Trump, in a Rose Garden announcement, said he was placing elevated tariff rates on dozens of nations that run meaningful trade surpluses with the US, while imposing a 10 per cent baseline tax on imports from all countries in response to what he called an economic emergency.
Aggressive rhetoric
The US president, who said the tariffs were designed to boost domestic manufacturing, used aggressive rhetoric to describe a global trade system that the US helped to build after World War II, saying “our country has been looted, pillaged, raped and plundered” by other nations.
The action amounts to a historic tax hike that could push the global order to a breaking point. It kickstarts what could be a painful transition for many Americans as middle-class essentials such as housing, autos and clothing are expected to become more costly, while disrupting the alliances built to ensure peace and economic stability.
Trump said he was acting to bring in hundreds of billions in new revenue to the US government and restore fairness to global trade.
National economic emergency
“Taxpayers have been ripped off for more than 50 years,” he said. “But it is not going to happen anymore.” Trump declared a national economic emergency to levy the tariffs. He has promised that factory jobs will return to the US as a result of the taxes, but his policies risk a sudden economic slowdown as consumers and businesses could face sharp price hikes.
Trump was fulfilling a key campaign promise as he imposed what he called “reciprocal” tariffs on trade partners, acting without Congress under the 1977 International Emergency Powers Act. But his action Wednesday could jeopardise Trump's voter mandate in last year's election to combat inflation.
Several Republican senators, particularly from farm and border states, have questioned the wisdom of the tariffs. US stock market futures sold off sharply overnight in anticipation of the economy weakening, after having already dropped since the start of this year.
Great Depression fears
“With today's announcement, US tariffs will approach levels not seen since the Smoot-Hawley Tariff Act of 1930, which incited a global trade war and deepened the Great Depression," said Scott Lincicome and Colin Grabow of the Cato Institute, a libertarian think tank.
The president's higher rates would hit foreign entities that sell more goods to the US than they buy. The administration essentially calculated its tariff rates to raise revenues equal in size to the trade imbalances with those nations. Trump then halved that rate in act that he described as “very kind.”
The White House says the tariffs and other trade imbalances led to a $1.2 trillion imbalance last year. Administration officials suggested it could take an extended set of actions by other countries to bring down the new tariffs their imports now face, and retaliatory tariffs by those countries could make the situation worse.
Olu Sonola, head of US economic research at Fitch Ratings, said the average tariff rate charged by the US would increase to roughly 22 per cent from 2.5 per cent in 2024.
“Many countries will likely end up in a recession," Sonola said. "You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time.”
Canada, Mexico 'spared'
The new tariffs will come on top of recent announcements of 25 per cent taxes on auto imports; levies against China, Canada and Mexico; and expanded trade penalties on steel and aluminum. Trump has also imposed tariffs on countries that import oil from Venezuela and he plans separate import taxes on pharmaceutical drugs, lumber, copper and computer chips.
Canada and Mexico would not face higher rates on what they're already being charged by Trump in what he says is an effort to stop illegal immigration and drug smuggling. As of now, goods that comply with the USMCA North American trade pact would be excluded from those tariffs.
But the 20 per cent charged on imports from China due to its role in fentanyl production would largely be added to the 34 per cent announced by Trump. The specific products that Trump is tariffing, such as autos, would be exempt from the tariffs unveiled Wednesday, as would products such as pharmaceutical drugs that he plans to tariff at a later date.
Threats of backlash
None of the warning signs about a falling stock market or consumer sentiment turning morose have caused the administration to publicly second-guess its strategy, despite the risk of political backlash.
Senior administration officials, who insisted on anonymity to preview the new tariffs with reporters ahead of Trump's speech, said the taxes would raise hundreds of billions of dollars annually in revenues. They said the 10 per cent baseline rate existed to help ensure compliance, while the higher rates were based on the trade deficits run with other nations and then halved to reach the numbers that Trump presented in the Rose Garden.
The 10 per cent rate would be collected starting Saturday and the higher rates would be collected beginning April 9.
Trump removed the tariff exemptions on imports from China worth $800 or less. He plans to remove the exemptions other nations have on imports worth $800 or less once the federal government certifies that is has the staffing and resources in place.
What think tanks say
Based on the possibility of broad tariffs that have been floated by some White House aides, most outside analyses by banks and think tanks see an economy tarnished by higher prices and stagnating growth.
Trump would be applying these tariffs on his own; he has ways of doing so without congressional approval. That makes it easy for Democratic lawmakers and policymakers to criticise the administration if the uncertainty expressed by businesses and declining consumer sentiment are signs of trouble to come.
Many allies feel they have been reluctantly drawn into a confrontation by Trump, who routinely says America's friends and foes have essentially ripped off the US with a mix of tariffs and other trade barriers.
The flip side is that Americans also have the incomes to choose to buy designer gowns by French fashion houses and autos from German manufacturers, whereas World Bank data show the EU has lower incomes per capita than the US.
Beijing warns of countermeasures
China has said it will resolutely adopt countermeasures against the 34 per cent tariffs imposed on over USD 438 billion Chinese imports to America, which is China’s third largest export market. China firmly opposes the US’s “reciprocal tariffs” and will resolutely adopt countermeasures to safeguard its rights and interests, a spokesperson for the Ministry of Commerce said.
Canadian Prime Minister Mark Carney said Trump's new tariffs would “fundamentally change the international trading system." He noted that the tariffs already in place against his country and those Trump says he plans to add will be fought with countermeasures.
“In a crisis, it's important to come together and it's essential to act with purpose and with force and that's what we will do,” Carney said.
Italy's conservative Premier Giorgia Meloni said Trump's new tariffs against the EU were “wrong” and Italy would work towards an agreement with the United States to avoid a trade war that would weaken all involved.
European Commission President Ursula von der Leyen said it was a major blow to the world economy and the consequences “will be dire for millions of people." Groceries, transport and medicines will cost more, she said, “And this is hurting, in particular, the most vulnerable citizens.”
Von der Leyen acknowledged that the world trading system has “serious deficiencies” and said the EU was ready to negotiate with the US but also was prepared to respond with countermeasures.
With agency inputs
Live Updates
- 3 April 2025 5:07 AM GMT
Trump’s tariffs will hurt vulnerable people most: EU leader
US President Donald Trump's announcement of a new 20 per cent tariff on the European Union drew a sharp rebuke from European Commission President Ursula von der Leyen.
She said it was a major blow to the world economy and the consequences “will be dire for millions of people”.
Groceries, transport and medicines will cost more, she said, “And this is hurting, in particular, the most vulnerable citizens.”
Von der Leyen acknowledged that the world trading system has “serious deficiencies” and said the EU was ready to negotiate with the US but also was prepared to respond with countermeasures. - 3 April 2025 4:29 AM GMT
Rupee falls, markets down in early trade
The rupee slumped 26 paise to 85.78 against the US dollar in early trade on Thursday, after US President Donald Trump unleashed reciprocal tariffs on about 60 countries.
Forex traders said Trump’s reciprocal tariffs sent shockwaves through the market, and investors sought for safe haven.
At the interbank foreign exchange, the rupee opened at 85.77 against the greenback, then lost ground and touched 85.78, down 26 paise from its previous close.
On Wednesday, the rupee had settled at 85.52 against the US dollar.
Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP, said the range today is expected between 85.50 to 86.00, and exporters may sell as rupee approaches 86.00.
In the domestic equity market, the 30-share BSE Sensex fell 324.40 points, or 0.42 per cent, to 76,293.04, while the Nifty declined 75.05 points, or 0.32 per cent, to 23,257.30 points.
Foreign institutional investors (FIIs) offloaded equities worth Rs 1,538.88 crore on a net basis on Wednesday, according to exchange data.
- 3 April 2025 4:26 AM GMT
Pharma, semiconductors, energy products won't face Trump tariffs: GTRI
Essential and strategic items such as pharmaceuticals, semiconductors, copper, and energy products like oil, gas, coal and LNG are exempted from the 27 per cent import duty announced by the US on Wednesday, according to think tank GTRI.
Overall, the Global Trade Research Initiative (GTRI) said that the USA’s protectionist tariff regime could act as a catalyst for India to gain from global supply chain realignments.
However, to fully leverage these opportunities, India has to enhance its ease of doing business, invest in logistics and infrastructure, and maintain policy stability, it added.
“If these conditions are met, India is well-positioned to become a key global manufacturing and export hub in the coming years,” GTRI Founder Ajay Srivastava said, adding that “there are goods that will face zero tariffs and these include essential and strategic items such as pharmaceuticals, semiconductors, copper, and energy products like oil, gas, coal, and LNG”.
The GTRI said that the imposition of higher reciprocal tariffs by the US on several Asian countries, including China, Vietnam, Taiwan, Thailand, and Bangladesh, presents an opportunity for India to strengthen its position in global trade and manufacturing.
However, gains will not accrue automatically, and India needs deep reforms for enabling scale production, domestic value addition and improving competitiveness to benefit, Srivastava said.
With the US setting a relatively lower reciprocal tariff rate of 27 per cent on Indian goods, compared to 54 per cent on China, 46 per cent on Vietnam, 37 per cent on Bangladesh, and 36 per cent on Thailand, “India gains a natural competitive advantage in several key sectors,” he added.
He said that one of the most prominent areas of opportunity lies in textiles and garments as the high tariffs on Chinese and Bangladeshi exports create room for Indian textile manufacturers to gain market share, attract relocated production, and increase exports to the US.
India’s strong base in textile production, coupled with lower tariffs, could drive greater global demand and new investments in the sector.
In the electronics, telecom, and smartphone sectors, countries like Vietnam and Thailand are likely to lose cost competitiveness due to the steep US tariffs, and this opens a window for India, which has already begun investing in electronics manufacturing through government incentives like the Production-Linked Incentive (PLI) scheme.
“The semiconductor space, while still dominated by technologically advanced players like Taiwan, also offers potential for India to capture parts of the value chain such as packaging, testing, and lower-end chip manufacturing,” he said.
Even a partial shift of supply chains from Taiwan due to tariffs (32 per cent) could benefit India if supported by adequate infrastructure and policy support.
Similarly, sectors like machinery, automobiles, and toys, where China and Thailand currently lead, are also vulnerable to tariff-related relocation.
Goods from India are already facing a 25 per cent tariff on steel, aluminium, and auto sectors. For the remaining products, India is subject to a baseline tariff of 10 per cent between April 5-8. Then the tariff will rise to country-specific 27 per cent starting April 9, he said.
“Overall, the new policy imposes heavier duties on imports in order to rebalance trade, promote US manufacturing, and reduce reliance on foreign supply chains. The actual tariff a country faces depends on what it is exporting and how its trade practices align with US economic and national security interests,” Srivastava added.
- 3 April 2025 4:19 AM GMT
Hopeful of India-US trade talks to mitigate tariff impact: ACMA
Automotive Component Manufacturers Association (ACMA) of India on Thursday said it is hopeful that the ongoing bilateral trade talks between India and the US will help mitigate the impacts of Trump’s tariff orders and lead to a balanced resolution that benefits both economies.
Reacting to Trump’s announcement of tariffs on Wednesday as part of the ‘Liberation Day’ initiative, ACMA President and Chairperson and Managing Director (CMD) Subros Ltd Shradha Suri Marwah said autos and auto parts and steel and aluminium articles, already subject to Section 232 tariffs at 25 per cent, announced earlier in Trump's order on March 26, 2025, are not covered in the latest order.
“The detailed list of auto components that will be subject to 25 per cent import tariff in the US is, however, awaited,” she said.
Marwah said ACMA understands the intent of the US administration to boost domestic manufacturing and address trade imbalances. “ACMA remains hopeful that the ongoing bilateral negotiations between the Indian and US governments will lead to a balanced resolution that benefits both economies,” she added.
Marwah further said, “We believe that the strong trade relationship between India and the United States, especially in the auto components sector, will encourage continued dialogue to mitigate the impacts of these measures.”
- 3 April 2025 4:17 AM GMT
How will Trump's tariffs hit Indian industries? Biden's aide explains
Former adviser to former US President Joe Biden and Co-Chair for Economic Subcommittee for Asian American and Native Hawaiian/Pacific Islander (AANHPI) Commission Ajay Bhutoria told PTI, “This sweeping policy will likely make Indian goods—such as textiles, and pharmaceuticals—less competitive, while tariffs on other major trading partners will drive up the cost of automobiles, groceries, medical supplies, and countless other products, hitting American consumers hard with an estimated additional $2,500 to $15,000 in annual expenses.”
Bhutoria said India’s key industries face declining export volumes and financial strain, threatening millions of livelihoods and potentially weakening the strong US-India economic partnership, while American households grapple with rising prices for everyday essentials.
“This decision injects market uncertainty and risks disrupting global supply chains, possibly pushing Japan, South Korea, India and others to diversify markets or pursue countermeasures.”
He urged leaders in both countries to engage in dialogue to address these challenges, “minimising the burden on American consumers and Indian producers alike, and preserving the collaboration that has long driven innovation and prosperity between our nations.”
- 3 April 2025 4:14 AM GMT
'Reckless': Indian-American lawmakers slam Trump's tariffs
Indian-American members of the US Congress and the diaspora community criticised the reciprocal tariffs imposed by President Donald Trump, calling them “reckless and self-destructive”, urging leaders in both countries to engage in dialogue to address these challenges.
The lawmakers also said that Trump’s tariffs will likely make Indian goods less competitive.
Congressman Raja Krishnamoorthi said Trump’s blanket tariffs are a tax on working families so that he can cut taxes for the wealthiest Americans.
“These latest so-called ‘Liberation Day’ tariffs are reckless and self-destructive, inflicting financial pain on Illinois at a time when people are already struggling to keep their small businesses afloat and put food on the table,” he said.
Krishnamoorthi, a Democratic lawmaker from Illinois, said the tariffs isolate the US on the global stage, alienate America’s allies, and empower its adversaries — all while forcing America’s seniors and working families to bear the brunt of higher prices.
Urging Americans to call on Trump to end his “disastrous” tariff policies before he sends the country into a recession, Krishnamoorthi said the tariffs do nothing to strengthen the American economy or national security.
Congressman Ro Khanna said in a video posted on his social media handle that the tariffs announcement “isn’t an April Fool’s joke”.
“Trump is literally trying to destroy our economy with his Liberation Day tariffs slapped overnight, no strategy, no consultation, no congressional input.
“What does this mean? Prices are going to go up. Prices for cars are going up. Prices for groceries are going up. Prices for home repairs and home building are going up, and there's total uncertainty,” Khanna said.
He added that businesses don’t know whether to invest, the stock market is down and “people are saying we could have a recession. We could have stagflation, meaning slow growth and higher inflation, all because of Trump's incoherent, incompetent economic policy.”
Indian-American Congressman Dr Ami Bera said in a post on X, “Let me be clear: these tariffs will not make America wealthy again. These costs will be passed onto YOU— the American consumer. This is not a tax cut. This is a tax hike.”
- 3 April 2025 4:08 AM GMT
Indian pharma sector welcomes exemption from reciprocal tariffs
The US Administration has exempted pharmaceuticals from reciprocal tariffs, underscoring the critical role played by generic medicines globally, Indian Pharmaceutical Alliance (IPA) Secretary General Sudarshan Jain said on Thursday.
The decision underscores the critical role of cost-effective, life-saving generic medicines in public health, economic stability, and national security, Jain said in a statement.
India and the US share a strong and growing bilateral trade relationship, with a shared vision to double trade to USD 500 billion under the Mission 500 initiative, Jain stated.
The pharmaceutical sector, India’s largest industrial export, was estimated at USD 12.72 billion in 2024.
Indian pharmaceutical companies supply a substantial proportion of drugs to US residents, with four out of ten of all prescriptions filled in the US in 2022 being supplied by Indian companies.
As per industry sources, medicines from Indian companies provided USD 219 billion in savings to the US healthcare system in 2022 and a total of USD 1.3 trillion between 2013 and 2022.
Generics from Indian companies are expected to generate an additional USD 1.3 trillion in savings over the next five years.
Sector experts had earlier noted that the enhanced tariffs on pharma imports in the US can severely impact Indian drug manufacturers as it would lead to higher production costs, making shipments less competitive against products from other countries. - 3 April 2025 2:18 AM GMT
India imposes uniquely burdensome certification requirements: White House
India imposes its “own uniquely burdensome” testing and certification requirements in sectors such as chemicals, telecom products, and medical devices, making it “difficult or costly” for American companies to sell their products in the country, the White House has said.
In a fact sheet issued after US President Donald Trump announced sweeping reciprocal tariffs on countries that levy taxes on US goods, the White House stated that non-tariff barriers—meant to limit the quantity of imports/exports and protect domestic industries—also deprive US manufacturers of reciprocal access to markets around the world.
Citing the example of India, the White House fact sheet said: “India imposes its own uniquely burdensome and/or duplicative testing and certification requirements in sectors such as chemicals, telecom products, and medical devices that make it difficult or costly for American companies to sell their products in India. If these barriers were removed, it is estimated that US exports would increase by at least USD 5.3 billion annually.”
On the issue of addressing trade imbalances, the White House said that Trump is working to level the playing field for American businesses and workers by confronting the unfair tariff disparities and non-tariff barriers imposed by other countries.
“For generations, countries have taken advantage of the United States, tariffing us at higher rates,” it said, citing the example that the United States imposes a 2.5 per cent tariff on passenger vehicle imports (with internal combustion engines), while the European Union (10 per cent) and India (70 per cent) impose much higher duties on the same product. For networking switches and routers, the United States imposes a 0 per cent tariff, but India (10-20 per cent) levies higher rates. For rice in the husk, the US imposes a tariff of 2.7 per cent, while India (80 per cent), Malaysia (40 per cent), and Turkey (31 per cent) impose higher rates. Apples enter the United States duty-free, but not so in Turkey (60.3 per cent) and India (50 per cent).
“The United States has one of the lowest simple average most-favoured-nation (MFN) tariff rates in the world at 3.3 per cent, while many of our key trading partners, like Brazil (11.2 per cent), China (7.5 per cent), the European Union (5 per cent), India (17 per cent), and Vietnam (9.4 per cent), have simple average MFN tariff rates that are significantly higher,” the White House fact sheet said. - 3 April 2025 2:14 AM GMT
Mixed bag, not setback: Govt official
The Commerce Ministry is analysing the impact of 26 per cent reciprocal tariffs or import duties imposed by the US on India, a senior government official said on Thursday.
According to the official, the universal 10 per cent tariffs will come into effect on all imports into the US from April 5 and the remaining 16 per cent from April 10.
“The ministry is analysing the impact of the announced tariffs,” the official said, adding there is a provision that if a country would address the concerns of the US, the Trump administration can consider reducing the duties against that nation.
India is already negotiating a bilateral trade agreement with the US. The two countries are aiming to finalise the first phase of the pact by fall (September-October) of this year.
“It is a mixed bag and not a setback for India,” the official said. - 3 April 2025 1:59 AM GMT
26 pc US tariffs on India to definitely hit exporters: FIEO
India’s apex exporters’ body, FIEO, stated on Thursday that the 26 per cent tariffs or import duties announced by US President Donald Trump on India will undoubtedly affect domestic players.
However, India is much better placed than many other countries, said Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO).
He expressed hope that the proposed bilateral trade agreement (BTA), currently being negotiated between the two countries, would be concluded at the earliest, as it would provide relief from these reciprocal tariffs.
“We have to assess the impact, but looking at the reciprocal tariffs imposed on other countries, we are in a lower band. We are much better placed compared to our key competitors such as Vietnam, China, Indonesia, Myanmar, etc. We will definitely be affected by the tariffs, but we are much better placed than many others,” Sahai told PTI.
The US President highlighted the high tariffs charged by India on American products as he announced reciprocal tariffs on countries worldwide, declaring a 26 per cent “discounted reciprocal tariff” on India.
“India, very, very tough. Very, very tough. The Prime Minister just left. He’s a great friend of mine, but I said, ‘You’re a friend of mine, but you’re not treating us right. They charge us 52 per cent…,” Trump said.
From 2021-22 to 2023-24, the US was India’s largest trading partner. The US accounts for about 18 per cent of India’s total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade.
With America, India has a trade surplus (the difference between imports and exports) of USD 35.32 billion in goods in 2023-24. This was USD 27.7 billion in 2022-23, USD 32.85 billion in 2021-22, USD 22.73 billion in 2020-21, and USD 17.26 billion in 2019-20.
In 2024, India’s main exports to the US included drug formulations and biologicals (USD 8.1 billion), telecom instruments (USD 6.5 billion), precious and semi-precious stones (USD 5.3 billion), petroleum products (USD 4.1 billion), gold and other precious metal jewellery (USD 3.2 billion), ready-made garments of cotton, including accessories (USD 2.8 billion), and products of iron and steel (USD 2.7 billion).
Imports included crude oil (USD 4.5 billion), petroleum products (USD 3.6 billion), coal, coke (USD 3.4 billion), cut and polished diamonds (USD 2.6 billion), electric machinery (USD 1.4 billion), aircraft, spacecraft and parts (USD 1.3 billion), and gold (USD 1.3 billion).
