PM Modi meets President Trump – Photo: PTI

What impact will Trump’s announcement have on India? Which Indian industries are likely to be affected by it and how much? What impact will the US administration’s new tariff have on the stock market? What impact can it have on America itself? Apart from this, where will India have an advantage and where will it have a disadvantage compared to other countries? Let’s find out…

US President Donald Trump announced tariffs on imports from most of his trade partners late Wednesday night as per Indian time. Trump has named these as reciprocal tariffs. The US government has said that a uniform tariff of 27% will be imposed on all goods exported by India to the US. Trump announced retaliatory tariffs ranging from 10% to 49% on his trade partners.

Amar Ujala tried to clarify the answers to many questions regarding these tariffs. For example, what is the impact of Trump’s announcement on India? Which Indian industries are likely to be affected to what extent? Apart from this, how much and when is the impact of the new tariff of the US administration likely to be seen on the stock market? What impact can it have on the US itself? Apart from this, where are the opportunities and where are the losses for India compared to other countries? Let’s know…

On the other hand, if we talk about import duty, our situation is better because the tariff imposed on our neighbouring countries and some other exporting countries is even higher than ours. The Trump administration has imposed a tariff of up to 54 percent on China (34 percent now and 20 percent announced earlier).

According to Kedia, if seen from this perspective, today our situation is better than other exporting countries. If we talk about the apparel and auto sector, we will be affected a little more, because the tariff on these sectors has increased the most. But if seen at a competitive level, other countries have imposed higher tariffs. But since America has imposed import duty on our products, some sectors have been affected, because the prices of these things will increase after the import duty is imposed in America. This may reduce India’s exports in the coming time. But our biggest competitor in exports is China and the tariff burden there will be more than us. Therefore, our products will be cheaper in America to some extent compared to China and we will benefit from this.

For example, if America imposes a 27% tariff on rice imported from India, then people who were getting Indian rice for Rs 100 earlier will now get rice for Rs 127 with the import duty. However, in the case of China, this tariff can be at least 34% and maximum 54%. That is, the price of Chinese rice can reach Rs 134 to Rs 154 in America, which is much higher than Indian rice. The same situation will be in the case of Bangladesh, Pakistan, Indonesia, Pakistan, Sri Lanka. That is, India will be in the best position among the exporting countries.

Will the stock market also be affected?

If Trump’s announcement had to have such a big impact, we would have seen it today itself. There is a saying – ‘The lion has come, the lion has come’. On January 20, when Donald Trump assumed the presidency, everyone knew from that day itself that he would impose tariffs on major exporting countries. He had been telling about it earlier also. So the countries knew that Trump would take such a decision and they had prepared themselves. Because of this, the stock market recovered after falling a bit in the beginning. So it can be said that the Indian market is quite mature.

It will be important in the future how India and America deal with the Free Trade Agreement (FTA) in the coming time. How the Modi government deals with this issue. We have to do an FTA, so whatever agreement will be made, it will take us towards a better situation than today. Therefore, in the long run, India will get relief from Trump’s tariffs. Due to this, the market did not become as negative as was being thought.

How much impact on America?

Currently the inflation rate in America is around 2.8 percent, but since many sectors of America are dependent on imports, for example, it is dependent on China, Bangladesh and other countries for apparel and automobiles. In such a situation, by imposing import duty, America will make itself many important things expensive. This is likely to increase inflation there. It is being told that after this decision, the inflation rate in America can reach 4.5 percent.

The effect of this will be that the possibility of reducing interest rates in America, which was being talked about, will once again reduce. Since the interest rate will not be reduced, people will have less money in their hands, the tendency to spend will be less. This will slow down the economic pace of America, which can increase the risk of recession. Earlier we were thinking that this risk is 15-20 percent. Now it can reach 30-40 percent.

Apart from this, the cost of imports for industries may increase, due to which corporate margins may decrease. Due to this, there has been a lot of turmoil in the US markets like NASDAQ and Dow Jones in the last few days. Due to this entire situation, there may be a reduction in jobs in America.

The US has currently kept sectors like pharmaceuticals, defence and semiconductors out of the ambit of tariffs. In other sectors, they feel that the US can manufacture most of the things at home instead of importing them. But it may take time for the US to reach that level of capacity.

Can India also impose retaliatory import duties on the US?

India is known for its policy of reaching agreements through negotiations. If India had to take any action, it would have already started working towards it. But in the case of India, we saw that during the Russia-Ukraine conflict, we kept our stand neutral. India knows that whenever there is a fight, we have to bow down or take a step back. In the case of the Russia-Ukraine war also, India later benefited from this and our GDP has remained stable continuously.

India has changed some policies before the US announced the imposition of reciprocal tariffs. In such a situation, instead of taking retaliatory action, India will try to reach an agreement with the US through negotiations, so that our industries may be affected, but not much.

On the other hand, according to Madhavi Arora, Chief Economist of MK Global Financial Services, the US decision to impose 26 percent tariffs may affect the trade of 30-33 billion dollars between the two countries. This can cause an impact of 0.8% to 0.9% on GDP. However, the impact on India will be less than the impact of tariffs on other Asian countries. According to Arora, America itself will suffer the brunt of its decision to impose import duty and its consumer prices can increase by 1.5% as soon as this decision is implemented. Not only this, the American economy is also likely to stagnate due to inflation.

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