Tariff’s influence on India: US President Donald Trump has recently announced a new tariff on countries around the world. It is being called a mutual tariff, which means that America will now impose the same tariffs on other countries that they put on America. This decision of Trump has created a stir worldwide. It can have a profound impact on the economies of many countries, but this news can also be somewhat relieved for India.
In fact, the US has imposed a 10% Aadhaar tariff on all countries. In addition, India will be imposed an additional 26% tariff. China will be charged 34%, 46% on Vietnam and 37% on Bangladesh. In addition, Indonesia will be imposed 32%, 20% on the European Union and 25% on Japan. Despite these fees, India’s exports to the US will be cheaper than most countries, as firstly, Indian goods coming from competitive countries will be reduced and secondly, Indian goods will be cheaper than countries lending less than India.
Trump says that the US is facing a $ 1.2 trillion trade deficit every year, which means that the US sells more than what he sells. Trump has taken this step to reduce it. But the question is how harmful or beneficial it is for countries like India? India has been imposed 26% tariffs, which is less than many other countries. For example, Vietnam has a 46% tariff and China has 34% tariff. These countries compete with the US in terms of many items exported from India.
In such a situation, India seems a bit strong in this situation. One of the major reasons for this confidence is that India and America are negotiating on bilateral trade agreement. If this agreement is reached, India can get relief from these fees. In addition, Indian exporters may benefit on their competitors like China and Vietnam, as they have more tariffs.
Which areas will be affected?
India exported goods worth $ 395.63 billion to the US during April-February 2025, making the US the largest export destination for India. In such a situation, areas of India which are likely to affect tariffs are likely to include cloth and apparel, IT-electronics and agricultural products like fish and rice. For example, India sends clothes worth $ 8 billion and agricultural products worth $ 5 billion to the US every year. 26% of tariffs will increase its prices, causing some damage. But the good thing is that Bangladesh has 37% tariffs and 46% on Vietnam. In such a situation, Indian clothes can be found cheap in America.
The annual income will reduce so much money
The tariff will not have any profound impact on the economy and the move is expected to reduce India’s GDP only 0.19%, as India currently share in global exports only 2.4%. If we consider this effect per family, then it is Rs. 1000 per year. There may be loss of 2396. Actually, India’s domestic demand is very strong, due to which our economy will continue to grow at the rate of 6.5-7.5%. Institutions like HDFC Bank and Deloite believe that India will benefit from ‘tariff arbitrase’, that is, our goods will be cheaper than others.
Danger of inflation in America!
But the situation can be difficult for the rest of the world. These tariffs can increase inflation in the US. If the value of the dollar does not increase, then the people there will buy things at 26% more expensive prices. This has posed a threat to ‘inflation’ in the US, which means inflation will increase and growth will stop. If tariffs are imposed in retaliation, areas like Europe and Asia will also be damaged. This is an opportunity for India to find new markets and increase trade with the European Union or Gulf countries. Apart from this, India’s strategy also includes increasing domestic production. If India succeeds in making trade agreements with America, Britain, Bahrain and Qatar, cloth, electronics and semiconductor areas may benefit.
Will tariff be reduced?
The Government of India is also ready to deal with the current situation. Steps are being taken to prevent the safety and dumping of local industries. Apart from this, efforts are also being made to complete the trade agreement with the US soon. Experts say that this tariff is also an opportunity for India. For example, India can increase its share in textiles and electronics. The federation of Indian export organizations estimate that India’s market could be $ 50 billion in the next 2-3 years. Overall, while the world is concerned about Trump’s tariff, it is an opportunity for India as well as an opportunity. The government and exporters will have to form a new strategy to help us move forward in this changing business environment.
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