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Donald Trump with Narendra Modi (File Image)

TRENDING NOW

After US President Donald Trump signed letters declaring tariffs on 14 nations, including allies, people are asking how much import duty he can impose on goods from India. Though the deadline for signing the deal for tariff fixation ends on July 9, India and the US are yet to ink a trade deal. After holding many rounds of talks with the US commerce department mandarins, the Indian delegation returned last week, expressing hope to reach a consensus soon. However, a final draft agreement eludes both countries. 

US tariffs on 14 countries

Indicating an imminent trade deal with India, Donald Trump said Tuesday, "We've made a deal with the United Kingdom, we've made a deal with China, we've made a deal - we're close to making a deal with India...Others we met with, we don't think we're going to be able to make a deal. So we just send them a letter." The US president told journalists, "We're sending out letters to various countries telling them how much tariffs they have to pay. Some will maybe adjust a little bit depending if they have a cause, we're not going to be unfair about it." The new tariff rates on 14 countries, including Bangladesh, Thailand, South Korea and Japan, will come into effect on August 1.

How much tariff on India?

So, what about India? How much tariff is Donald Trump most likely to impose on India? Earlier, he announced a tariff of 26% on Indian imports. Later, he suspended tariff rates for all countries, including India, and declared a moratorium of three months, which expires Wednesday, July 9. India and the US officials launched wide-ranging talks to reach to a comprehensive trade deal. The main issues of contention are market access to the US agriculture and dairy products and tariff rates on Indian steel, aluminium and automotive parts. 

Contentious issues

The US is adamant on getting market access to the Indian agriculture,  dairy and poultry sectors. India has expressed concerns on the agriculture sector as it provides the maximum number of jobs to its people. India is apprehensive of opening the sector for soybean, soybean oil and canola oil as these may hit its edible oil sector hard. Similarly, India is apprehensive of the US GM foods that may have wide-ranging and far-reaching consequences. On the other hand, Washington has refused to lower tariffs on aluminium and steel products as well as automotive parts. Only these sectors can cause a loss of $5 billion to India. 

Analysts believe that Donald Trump may ask his negotiators to lower the rhetoric and reach a consensus with India so that New Delhi can be used to counterbalance China, the main trading adversary of the US. Washington may impose a lower tariff on India compared to Beijing. Experts believe it may be in the range of 15% to 25%. India may allow limited market access to the US agriculture, dairy and poultry products. 

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