India should reciprocate if US imposes additional duties on domestic goods: Trade experts

New Delhi: India should respond with equal measures if the newly elected US President Donald Trump would impose higher tariffs on domestic goods, trade experts say.

They noted that India has previously implemented retaliatory customs duties on several US products, such as apples, in response to what it deemed "illegal" tariffs imposed by America on certain steel and aluminium products.

In December last year, Trump has said India charges "a lot" of tariffs, reiterating his intention to impose reciprocal tariffs in retaliation for what New Delhi will impose on the import of certain American products.

"India should respond firmly and in equal measures," economic think tank Global Trade Research Initiative (GTRI) Founder Ajay Srivastava said.

In 2018, when the US taxed Indian steel and aluminium, India retaliated by raising tariffs on 29 US products, recovering equivalent revenue.

"This measured response showed India's capability to protect its trade interests while staying balanced," Srivastava said.

He added that Indian exporters may face high customs duties for goods like automobiles, textiles and pharmaceuticals if the new US administration decides to pursue the 'America First' agenda.

He also said that if Trump would tighten H-1B visa rules, it may impact the growth of Indian IT firms.

Over 80 per cent of India's IT export earnings come from the US. The US is India's largest trading partner, accounting for over USD 190 billion of annual trade.

Sharing similar views, international trade expert Abhijit Das said that additional duties by the US, if implemented, will lock the market for Indian goods.

"Of course, India should retaliate with equal measures," Das said, adding that imposing retaliatory customs duties would strengthen India's position in negotiating the removal of "illegal" tariffs in the future.

"In the case of imposition of duties by the US, India should explain why those are illegal and if not withdrawn, we should not hesitate in taking retaliatory measures," he said adding Trump has complaints in several sectors like agri goods, industrial products, services, intellectual property rights and digital trade.

Another expert said that the Indian government should do a comprehensive consultation with the stakeholders and prepare itself to deal with any such move by the new American authorities.

Trade experts further stated that Trump's claim that India is an "abuser" of import tariffs is unfair as many nations including America protect their domestic industries by imposing high customs duties on certain products. In October 2020 also, Trump labelled India as the 'tariff king'.

According to WTO's World Tariff Profiles 2023, the US also imposes high duties on items like dairy products (188 per cent), fruits and vegetables (132 per cent), coffee, tea, cocoa and spices (53 per cent), cereals and food preparations (193 per cent), oilseeds, fats and oils (164 per cent), beverages and tobacco (150 per cent), fish and fish products (35 per cent), minerals and metals (187 per cent), and chemicals (56 per cent).

International trade expert Biswajit Dhar also said that Trump would increase tariffs in various sectors as he has to follow his call for MAGA (Make America Great Again).

"India has a trade surplus with the US and they have flagged this issue earlier several times. We have always favoured consultations, we have not done things unilaterally. But if things do not work out, we should also consider proportionate measures," Dhar said.

However, certain exporters are of the view that Trump will not go ahead with its threat as a number of US companies have shown interest to invest in India and any move to impose duties will impact them also.

"I think, India-US trade relations will be strengthened further," Federation of Indian Export Organisations (FIEO) President Ashwani Kumar said.

The exporters added that in fact, India will get an opportunity to increase exports to the US if America would impose higher duties on Chinese goods.

Going by the data, during 2001-23, at a Compounded Annual Growth Rate (CAGR), India's exports to America rose by 10.48 per cent. In this period, the US imports from the world have grown by 4.76 per cent.

They added that the two economies have strongly integrated with each other through various agreements, including the IPEF (Indo-Pacific Economic Framework for Prosperity) and other bilateral mechanisms.

The US is the largest trading partner of India in 2023-24. India's exports stood at USD 77.51 billion, while imports aggregated at USD 42.2 billion in the last fiscal.

During April-December this fiscal, the country's exports to America rose by 5.57 per cent to about USD 60 billion, while imports grew by about 2 per cent to USD 33.4 billion.