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What will be the impact of Trump's 50 percent import duty on India? Which sectors of the country are going to be most affected by this decision? Which sectors will not be affected by American tariffs? What will be the impact of Indian products becoming expensive in America? Let's find out...

US President Donald Trump's decision to impose a 25% tariff on India as a penalty over and above the normal import duty of 25% is coming into effect from today (August 27). After Trump's 50% tariff is implemented, exports of many Indian products to the US will become expensive.

In such a situation, it is important to know what impact Trump's 50 percent import duty will have on India? Which sectors of the country are going to be most affected by this decision? Which sectors will not be affected by American tariffs? What will be the impact of Indian products becoming expensive in America? Let's know...

What will be the effect of a 25% penalty on top of Trump's 25% tariff?
With this decision, most of the products exported from India to America are sure to become expensive. It is believed that this can be a blow to Indian exporters, because America is a big buyer of Indian products. Due to the increase in tariff, American citizens can prefer goods coming from other countries at lower tariff rates instead of Indian products.

What are the trade figures between India and America?

Which areas of India are likely to be more affected?

The effect of this tariff can be seen on our textiles, jewellery and gems, agriculture and some other sectors. If we talk about the 25 percent tariff that came into effect from August 7, then the rice that American citizens were getting earlier for Rs 100, now after the imposition of 25 percent import duty, they will get it for Rs 125. After the 25 percent additional tariff imposed on August 27, it will increase to Rs 150. The same situation will be with products from different sectors.

1. Textile
A large part of India's textile industry exports is dependent on America. 28 percent of the total textile exports from India go to America alone, whose total value is more than 10.3 billion dollars. The new tariff will affect this sector the most. Countries like Vietnam, Indonesia and Bangladesh will benefit from it. America is imposing 19 percent tariff on Vietnam, while Trump has imposed 20 percent tariff on Indonesia. In this context, India's textile sector is likely to lose competition due to American tariff. Similarly, tariff rate on Bangladesh and Cambodia is also less than 20 percent.

2. Gems and Jewellery
India's gems and jewellery sector is also likely to be affected by the US tariff. This sector exports goods worth $12 billion to the US every year. Currently, the US has a baseline tariff of 10 per cent on this industry, which was announced in April itself, while earlier this duty was zero on polished diamonds, 5-7 per cent on gold and platinum jewellery and 5-13.5 per cent on silver jewellery. Due to the new tariff, the gems and jewellery sectors are likely to suffer major losses.

3. Agricultural products
India currently exports agricultural products worth more than $5.6 billion to the US. Marine products, spices, dairy products, rice, AYUSH and herbal products, edible oil, sugar and fresh vegetables and fruits are among its major exports. It is believed that Trump's tariff will have the biggest impact on India's seafood industry i.e. marine products.

4. …and which other sectors are likely to be affected?
Apart from these sectors, the leather and footwear industry exports $1.18 billion, the chemical industry exports $2.34 billion and the electric and machinery industry exports $9 billion to the US every year.

Which sectors can escape the impact of Trump's tariffs?

1. Electronics
India's electronic sector is the largest export sector to the US. In the last few years, India has become the largest exporter to the US in terms of smartphones, laptops, servers and tablets. News agency PTI quoted government sources on Thursday as saying that the US will have to review section 232 to impose import duty on this sector. That is, this sector is expected to get relief from American tariffs.

2. Pharma
America is the biggest destination for India's pharma sector. According to reports, India's total exports to America have been $10.5 billion. That is, about 40 percent of India's total pharma exports go to America. Analysts have claimed that this sector of India has been kept out of the scope of Trump's tariff for now. Brokerage house Jefferies has said that for now Trump's retaliatory tariffs will have minimal impact on the Indian pharma sector, but any additional tariffs cannot be ruled out in the future.

What is the opinion of experts on Trump's tariff?

Amar Ujala tried to understand from two economic experts what will be the future impact of Trump's tariff? Let's know what the experts say on this issue...

1. Kishor Ostwal
Kishor Ostwal, CMD of CNI InfoExchange Private Limited, told us that if America had to impose such a high tariff on India, then it would probably not have sent its trade delegation to India on 24 August. Obviously, America wants to reduce its import duty and reach a beneficial agreement. However, some sectors of India still have not received relief from America. Among these, the smartphone sector and the pharma sector are at the top. That means about half of India's exports (50-55%) will not be affected much.

On the other hand, the inflation rate in America has been very high in the recent past. Now, if tariffs have increased on most countries of the world and India's cheap products also become more expensive by coming under the purview of a 50 percent tariff, then there is a danger of inflation, which had calmed down after three years rising again. In such a situation, American citizens may come out in protest against rising inflation in the coming times.

Ostwal further said, "The countries on which tariffs have been imposed may reduce their exports in the coming times and may go for free trade agreements (FTAs) with some other countries or may go for a barter system (exchange of products with each other), so that their dependence on US exports is reduced."

2. Ajay Kedia
Ajay Kedia, director of Kedia Securities and expert in economic matters, said that till now we were getting the benefit of trade surplus with America. But now the tariff and penalty imposed by the Trump administration will affect India's exports. He said that the Indian products that will face tariff in America in the coming time, their exports may fall by about 40-50 percent. Especially in the gems and jewellery sector, there may be a decline of 50 percent.

Kedia said that America may face difficulty in finding alternatives to the volume in which India exports at present. This is likely to increase inflation there. On the other hand, to reduce its trade deficit, it has imposed 15-30 percent import duty on most of the countries. That is, inflation in America is sure to increase.

PC:AmarUjala