India will be dropping its tariffs 'very substantially': Trump

Just a few hours before Trump’s comments, the White House said India imposes a 100 per cent tariff on American agricultural products.

New Delhi: Prime Minister Narendra Modi’s government has decided to “substantially” slash duties on exports from America, President Donald Trump said, even as a report published by his administration in Washington, DC, flagged several tariff and non-tariff barriers New Delhi imposed on imports from the US to India.

Even as New Delhi is bracing for the "reciprocal tariffs" that the Trump administration is set to impose from Wednesday on imports from India and other countries to America, the National Trade Estimate (NTE) Report 2025, released by the office of the US Trade Representatives, pointed out that India maintained high import duties on a wide range of goods exported from America, such as agricultural items, drug formulations, and alcoholic beverages, in addition to imposing non-tariff barriers.

The report highlighted several trade and regulatory challenges the US companies experienced while doing business in India, including issues related to tariffs, non-tariff barriers, intellectual property, services, digital trade, and transparency.

“I think a lot of countries will drop their tariffs because they’ve been unfairly tariffing the United States for years. If you look at the European Union on cars, the European Union has already dropped their tariff to 2.5 per cent. It was announced a couple of days ago. A very small tariff. The United States charged very little,” Trump told journalists at the Oval Office early on Tuesday (Indian Standard Time).

“I think I heard that India, just a little while ago, is going to be dropping its tariffs very substantially. I said, why didn't somebody do this a long time ago. A lot of countries are going to be dropping their tariffs,” said Trump.

Trump repeatedly criticised India for imposing high tariffs on US exports over the past several weeks, just as he had been doing in his first term in the White House.

The 47th US President hosted Prime Minister Narendra Modi at the White House on February 13, and the two leaders agreed to negotiate a trade agreement. They set the target to conclude negotiations, at least for the first part of the agreement, by fall 2025. Trump, however, continued his rants on India’s high tariffs on exports from the US. While delivering an address to the American Congress on March 4, he announced that the US would impose reciprocal tariffs on imports from India and other countries from April 2.

The US goods imports from India totalled $87.4 billion in 2024, 4.4 per cent or $3.7 billion more than in 2023. India imported goods worth $41.75 billion from the US in 2024. India was the destination of 2.02 per cent of exports in 2024. The US goods trade deficit with India was $45.6 billion in 2024, an increase of $2.3 billion (5.3 per cent) over 2023.

New Delhi purportedly conveyed to Washington, DC that it was willing to consider slashing tariffs on 55 per cent of the US exports to India, worth about $23 billion.

The Modi government in New Delhi, in its 2025-26 annual budget, announced a reduction of the customs duty rates on several items imported to India, following up on the similar announcement in the July 2024 budget. Finance Minister Nirmala Sitharaman recently said in the Rajya Sabha that as a result of two tranches of rationalisation, the number of custom tariff rates had now come down from 21 to eight. She, however, added that the government was not doing it in response to the Trump administration’s threat to impose reciprocal tariffs on imports to the US, but to make India a developed and self-reliant nation.

The White House, however, continued its tariff tirade against India, with Trump’s press secretary, Karoline Leavitt, pointing out that India imposed a 100 per cent tariff on the imports of US agricultural products.

“First of all, unfortunately, these countries have been ripping off our country for far too long, and they've made, I think, their disdain for the American worker quite clear,” Leavitt told journalists in Washington, DC on Monday.

“If you look at the unfair trade practices, we have 50 per cent from the European Union on American dairy, you have a 700 per cent tariff from Japan on American rice. You have a 100 per cent tariff from India on American agricultural products. You have nearly a 300 per cent tariff from Canada on American butter and cheese,” she said, adding, “So it's time for reciprocity, and it's time for a president to take historic change, to do what's right for the American people, and that's going to take place on Wednesday.”

"India maintains high applied tariffs on a wide range of goods, including vegetable oils (as high as 45 per cent); apples, corn, and motorcycles (50 per cent); automobiles and flowers (60 per cent); natural rubber (70 per cent); coffee, raisins, and walnuts (100 per cent); and alcoholic beverages (150 per cent),” the USTR report noted. It also noted that India maintained very high basic customs duties on drug formulations, including life-saving drugs and finished medicines listed on the World Health Organisation's list of essential medicines.

"High tariff rates also present a significant barrier to trade in other agricultural goods and processed foods (like poultry, potatoes, citrus, almonds, pecans, apples, grapes, canned peaches, chocolate, cookies, frozen French fries, and other prepared foods used in fast-food restaurants),” it underlined. India's World Trade Organisation (WTO) bound tariff rates on agricultural products are among the "highest" in the world, averaging 113.1 per cent and ranging as high as 300 per cent.

Given the large disparity between WTO-bound and applied rates, India has considerable flexibility to change tariff rates for both agricultural and non-agricultural products at any time, creating tremendous uncertainty for US workers, farmers, ranchers, and exporters, the report pointed out. India has imposed import bans, restrictions, licensing requirements on certain goods, mandatory Quality Control Orders (QCOs), customs barriers, price control on medical devices, and mandatory domestic testing and certification requirements for equipment, it added.