India Braces for Trade Fallout from Trump’s Liberation Day

US President Donald Trump has declared April 2 as 'Mukti Diwas'. He says that from this day he will impose reproducible tariff on all countries and this will free America from trade deficit. Reproducible tariff means that the Trump administration will impose the same tax on trade with the countries as the country has imposed on American products. There is a stir in the whole world about this. India's market opened with a fall of 350 points on Tuesday and the stock markets of many other countries including America have also been shaken. Industries in India are also worried about Trump's decisions, but businessmen in America are also no less worried. They feel that if the import of raw materials becomes expensive, then their production cost will increase and prices will have to be increased. This will affect the entire market.

India on Edge

A section of experts believes that America can postpone this tariff decision. India is also one of those countries with which America is considering a trade agreement. Let us know what is America's tit for tat tax plan...

What is the 'tit for tat' tax plan?
America says that it will impose the same tax on the countries with which it is facing trade deficit as they have imposed on its products. Donald Trump claims that America imposes less tax, while countries like China and Canada have imposed more tax. He says that due to this America is facing a trade deficit of one trillion US dollars. This is also affecting American industries and employees.

What will be the impact of the tariff decision on India
Many countries like China, Canada, Mexico, Europe are uncomfortable with America's plan. But it is not a matter of concern for India. Experts believe that America itself is in surplus in trade with India, so the tax imposed by it will not have any significant impact. America has been India's largest trading partner during 2021-22 to 2023-24. America has an 18 percent share in India's total exports, while imports are 6.22 percent. Bilateral trade was 10.73 percent. America is in a surplus of $ 35.32 billion in terms of import and export of goods. This is the figure for 2023-24, which was $ 27.7 billion in 2022.

The trade deal between America and India will also be monitored
It is not clear yet how much tariff will be imposed on India if America imposes it. Apart from this, it is also not clear whether this tariff will be imposed at the product level, sector level or country level. Regarding the American tariff, GTRI founder Ajay Srivastava says that the tax that India imposes on American products is much less than the claims. If America adopts the right business policy, then exports from India will continue. There will not be any hindrance in this. But we will also have to keep an eye on what trade deal will be done between America and India.

What will be the impact of tit for tat traffic on India?
Now another question is that what will happen if America imposes tariff on all Indian products on the basis of equality. 7.7% tariff is levied on American products imported into India, whereas America levies only 2.8% tariff on goods exported from India. In this way, if America also increases the tax, it can increase by 4.9% and the difference will end. Although even if different taxes are imposed according to the products, India will get a shock, but its ratio will not be very high.