New Delhi, February 21 Reducing the US's reciprocal tariff on India from 25 per cent to 10 per cent will significantly improve the competitiveness of labor-intensive sectors in the US, such as pharmaceuticals, electronics, engineering, textiles, and jewelry.
This is a major setback for US President Donald Trump's key economic agenda for his second term. The US Supreme Court, in a 6-3 ruling written by Chief Justice John Roberts, ruled that the tariffs imposed by the president on nations around the world were illegal, and that he had overstepped his authority when he imposed these tariffs.
Later, the US announced a temporary import surcharge of 10 per cent ad valorem on goods imported into the US for 150 days, starting from February 24.
Currently, these sectors face a 25 per cent reciprocal tariff in the US market.
The US is a major export destination for these sectors, and the reduction in tariffs will help boost exports, said Ajay Sahai, Director General of the Federation of Indian Export Organizations (FIEO).
A leather exporter said that this development will make their goods more competitive.
However, Sahai said that the Section 232 tariffs on steel, aluminum, and certain auto products remain a constraint.
"India should leverage this improved position to expand its market share while pursuing trade negotiations for greater stability and sectoral relief," he added.
Sahai said that if India were to re-evaluate its trade deal with the US, the agreement is comprehensive, going far beyond just tariff concessions on goods.
"A trade agreement would help with tariff concessions or exclusions, provide long-term predictability, and prevent re-imposition through alternative US legal routes... However, both sides may recalibrate negotiations in light of the changed tariff environment," Sahai said.
The tariff ruling, he said, creates an opportunity to pursue a more balanced and rules-based framework rather than one driven by unilateral tariff actions.
In 2021-25, the US was India's largest trading partner in goods. The US accounts for about 18 per cent of India's total exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade.
In 2024-25, India-US bilateral trade touched USD 186 billion (USD 86.5 billion in exports and USD 45.3 billion in imports).
This is a major setback for US President Donald Trump's key economic agenda for his second term. The US Supreme Court, in a 6-3 ruling written by Chief Justice John Roberts, ruled that the tariffs imposed by the president on nations around the world were illegal, and that he had overstepped his authority when he imposed these tariffs.
Later, the US announced a temporary import surcharge of 10 per cent ad valorem on goods imported into the US for 150 days, starting from February 24.
Currently, these sectors face a 25 per cent reciprocal tariff in the US market.
The US is a major export destination for these sectors, and the reduction in tariffs will help boost exports, said Ajay Sahai, Director General of the Federation of Indian Export Organizations (FIEO).
A leather exporter said that this development will make their goods more competitive.
However, Sahai said that the Section 232 tariffs on steel, aluminum, and certain auto products remain a constraint.
"India should leverage this improved position to expand its market share while pursuing trade negotiations for greater stability and sectoral relief," he added.
Sahai said that if India were to re-evaluate its trade deal with the US, the agreement is comprehensive, going far beyond just tariff concessions on goods.
"A trade agreement would help with tariff concessions or exclusions, provide long-term predictability, and prevent re-imposition through alternative US legal routes... However, both sides may recalibrate negotiations in light of the changed tariff environment," Sahai said.
The tariff ruling, he said, creates an opportunity to pursue a more balanced and rules-based framework rather than one driven by unilateral tariff actions.
In 2021-25, the US was India's largest trading partner in goods. The US accounts for about 18 per cent of India's total exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade.
In 2024-25, India-US bilateral trade touched USD 186 billion (USD 86.5 billion in exports and USD 45.3 billion in imports).
