The U.S. administration justifies the tariff on India by pointing to a 52% duty allegedly imposed by India on U.S. goods, while Indian exports have benefited from near-zero U.S. tariffs for decades. Non-tariff barriers, including regulatory hurdles, are also cited as factors affecting U.S. exports.
This development coincides with ongoing bilateral trade negotiations between India and the United States. Both nations have been working towards a trade agreement aimed at reducing tariff and non-tariff barriers, with the goal of doubling bilateral trade to $500 billion by 2030.
The imposition of tariffs has introduced complexities into these negotiations. Indian officials are now tasked with addressing the immediate economic implications of the tariffs while continuing to pursue long-term trade objectives. The apparel and footwear sectors, among others, are particularly concerned about the potential impact on export competitiveness and investor confidence.
Economists warn that these tariffs could lead to increased consumer prices and disruptions in global supply chains. The fashion industry, heavily reliant on Asia-based supply chains, is notably vulnerable. Companies are reevaluating sourcing strategies and facing margin pressures, especially in footwear, where compounded tariffs can significantly raise costs.
In response, Indian policymakers are exploring various scenarios to mitigate the fallout on Indian goods. While countermeasures are being considered, the focus remains on pursuing a bilateral trade deal with the U.S.