In a move that could redefine US-India trade dynamics, US President Donald Trump on April 2 announced a 26% reciprocal tariff on goods imported from India, calling the measure a “discounted” and “kind” version of what he said are much steeper tariffs imposed by India on US exports.
The announcement came during a fiery Rose Garden event at the White House titled “Make America Wealthy Again”, where Trump declared April 2 as “Liberation Day”—the day America reclaims control of its trade. The tariffs will take effect midnight Wednesday, 12:01 a.m. EDT.
“India charges us 100% on some agricultural imports. That’s not fair. We’re putting in a reciprocal tariff—though a discounted one—of 26%. That’s still less than what they’re doing,” Trump said, referencing key products like almonds, apples, and dairy.
He specifically called out Indian Prime Minister Narendra Modi, saying:
“PM Modi 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%,” Trump said, referring to Modi’s recent visit to the US.
This statement aligns with a chart of trade grievances released by the Trump administration, which shows that India’s average tariff burden on US goods is 52%, leading to the 26% reciprocal rate now imposed by Washington.
Economic impact on India
According to a recent analysis by Emkay Global, even a 25% tariff could knock off $31 billion from India’s GDP, which amounts to 0.72% of its projected $4.3 trillion economy by end-2025, per IMF estimates. With Trump’s 26% levy now confirmed, the actual impact could be even higher.
India is America’s largest trading partner, with bilateral trade exceeding $118 billion in 2023. The US consistently runs a $40 billion trade deficit with India, something Trump has long criticized.
Key Indian sectors under threat:
- Pharmaceuticals and medical devices
- Textiles and apparel
- Jewelry and gemstones
- Refined petroleum
- IT services and machinery
These industries form the backbone of Indian exports to the US and could see significant margin pressure, pricing challenges, and order slowdowns.
Not full reciprocity, but a warning
“We will charge them approximately half of what they are and have been charging us. So the tariffs will be not a full reciprocal,” Trump said. “But that halved figure includes the combined rate of all their tariffs, nonmonetary barriers, and other forms of cheating.”
Despite repeated references to fair trade, the tariffs are part of a broader Trump protectionist agenda, now being revived ahead of the 2025 election cycle. India is among 50+ nations affected, with 26% for India, 34% for China, 20% for the EU, and 46% for Vietnam.
What happens next
The US Commerce Department is expected to release the detailed list of Indian goods affected later this week. In the meantime, analysts warn of ripple effects across global markets, diplomatic tensions, and likely retaliation from affected countries.
India has yet to respond officially, but New Delhi is expected to weigh the political optics and economic implications before deciding on countermeasures.
Disclaimer: The information provided is based on publicly available sources and provisional estimates. Market dynamics may evolve as new policies and reactions unfold.
