US Reciprocal Tax Plan: A Misfire That Could Backfire?
After his meeting with PM Modi, Donald Trump announced plans to impose a reciprocal tax on Indian goods, aiming to match India’s tariffs on US products. However, this move may not work as intended.
According to the Global Trade Research Initiative (GTRI), the two nations trade vastly different goods, making it challenging to implement reciprocal tariffs equitably. Experts highlight that 75% of US exports to India already face low tariffs of under 5%.
India, on the other hand, is already subjected to high duties on exports such as textiles, garments, and footwear—some reaching up to 35%. Rather than leveling the playing field, the US could inadvertently reinforce existing trade imbalances.
During their meeting, it was revealed that India plans to purchase more oil, gas, and military hardware from the US to reduce the trade deficit. Trump also hinted at a potential trade deal, though the specifics remain unclear.
Adding to the confusion, the US has yet to specify whether the reciprocal tax would target specific products or entire industries. Experts warn that any disruption in growing India-US trade relations could benefit China, potentially making it the winner of the escalating trade wars.
Stay tuned for updates on this developing story.
