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US President Donald Trump has said that reciprocal tariffs will be imposed on several countries from April 2, as a measure to hit-back on countries that tax America. While making the announcement, he cited high tariffs in countries such as China, Brazil and India, but Indian officials held out hope for a resolution that could help India escape the tariffs and eventually culminate in a trade deal by this fall.
Though Trump didn’t specifically refer to electronic goods in his joint session address of the US Congress, Indian electronics are still a key item imported by US tech firms, according to a Mint report.
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As a result, global brands like Apple which use India as a manufacturing hub can see their overall costs increase and this would pressurize the advantage India currently has over other countries as a low-cost, electronics manufacturing destination.
When it comes to scale, India’s net exports of electronics amount to $30 billion. 60% of this is smartphones and two-thirds of those are Apple’s iPhones.
What did Trump say about Indian tariffs?
Trump labelled the tariffs imposed by various countries on US goods as “very unfair” and singled out “higher than 100%” tariffs that he claimed India currently imposes, but this was on automotive imports from the US.
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What tariffs does India impose on US-origin electronics?
The Centre in the interim Union budget last year reduced the import tariff on smartphones from 20% to 15%. Similarly, smartwatches also are currently facing a 20% import duty.
What will be the impact of the US tariffs?
As of now, India’s electronic manufacturers don’t think the tariffs would immediately hurt them, according to the report which cited their reasoning being that India is a cheap market in various cost factors which allow them to build large factories.
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However, the impact will take place only if India imposes further reciprocal duties which would reduce cost benefits for companies like Apple and Samsung.
The report cited trade policy experts as saying that reciprocal tariffs are “akin to a geopolitical conflict” and that if neither nation backs down from the heavy taxes, brands may be forced to increase prices to maintain operating margins.
The India-US bilateral trade treaty expected to take place later this year is also a point of focus, since the mutual understanding can give a major advantage to India in its bid to outpace China.
