Washington, D.C. – In a significant move aimed at addressing trade imbalances, US President Donald Trump has signed an executive order imposing a “discounted” 25% reciprocal tariff on Indian goods. The order, titled “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits,” was signed at the White House’s Rose Garden on April 2, 2025, a day Trump described as “Liberation Day” for American industry.
The White House justified the decision by pointing to India’s “burdensome and duplicative testing and certification requirements” in sectors such as chemicals, telecom products, and medical devices, which it claims make it difficult and costly for American companies to access the Indian market.
“If these barriers were removed, it is estimated that US exports would increase by at least $5.3 billion annually,” the White House document stated.
Tariff Discrepancies and India’s Trade Policies Under Scrutiny
The executive order highlights the disparity in tariffs between the US and its trading partners, with India charging some of the highest import duties on American goods.
According to the document, while the US maintains an average Most-Favoured-Nation (MFN) tariff rate of 3.3%, India imposes an average of 17%, significantly higher than other major economies, including China (7.5%), Brazil (11.2%), the EU (5%), and Vietnam (9.4%).
The order also detailed sector-specific tariff differences:
- Automobiles: The US levies a 2.5% tariff on passenger vehicle imports, while India imposes 70% on similar products.
- Technology: The US charges 0% tariff on network switches and routers, but India levies 10%.
- Agricultural Products:
- The US imposes a 2.7% tariff on rice in the husk, while India’s rate is 80%.
- Apples enter the US duty-free, whereas India imposes a 50% tariff.
- Ethanol: The US charges 2.5%, while Brazil (18%) and Indonesia (30%) impose significantly higher duties.
Trump Calls India ‘Very Tough’ on Trade, Announces ‘Discounted’ Tariff
During the announcement, Trump specifically called out India’s trade policies, stating that the country has been “very, very tough” in its dealings with the US. Holding up a chart comparing tariffs imposed by different nations, Trump claimed that India charges the US 52% in tariffs, including currency manipulation and trade barriers.
“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%,” Trump said.
In response, the US will now impose a 26% “discounted reciprocal tariff”—half of India’s levies on American goods.
The new tariffs are expected to add further tension to US-India trade relations, which have faced periodic disputes over market access, digital taxes, and intellectual property rights. It remains to be seen how the Indian government will respond to the latest trade measure.
