Donald Trump has often labeled India as the 'Tariff King', accusing it of imposing the highest tariffs on American exports. Recently, he mentioned a 25% tariff while reiterating his claim. However, these assertions by Trump are hollow, and data shows that India does not qualify as the Tariff King. Compared to other nations, India charges considerably lower tariffs on American exports.
Debunking the 'Dead Economy' Myth
Time and again, President Trump has declared India as the nation with the highest tariffs. On July 30, he highlighted these issues while announcing a 25% tariff on Indian exports. Post-announcement, Trump shifted his narrative, stating that India isn't a good trade partner due to its allegedly high tariffs. Yet, this portrayal is misleading.
Moreover, Trump criticized India and Russia's trade relations, labeling India's economy as a 'Dead Economy.' However, these claims lack substance. Currently, India is among the fastest-growing economies worldwide, on its way to becoming the third-largest. With a GDP growth rate consistently above 6% over the last four years, India's economy is anything but stagnant.
Understanding the Tariff Game Through Numbers
Turning to tariff data, Trump's Tariff King claims falter. Over the past three decades, India has significantly reduced its tariffs from 56% in 1990 to the current 4.6%. Data reveals India's weighted tariff is much lower than Vietnam, Indonesia, or the European Union, which stand at 5%, 5.1%, and 5.7%, respectively, with Bangladesh at 10.6%.
It's crucial to understand what weighted tariffs are and how they differ from ordinary tariffs. While the average tariff in India is 15.98% across all products, irrespective of their trade volume, trade-weighted tariffs apply actual duty based on import volumes, a more accurate market measure.
India's Tariffs Among the Lowest
Contrary to Trump's narrative, India's tariffs on American exports are among the lowest globally. Over 45% of American exports to India face tariffs of less than 5%, with many at 10%. India charges minimal tariffs on crude oil, industrial machinery, and pharmaceutical exports.
Compared to other Asian markets like China, Vietnam, or South Korea, India offers more favorable market access with lower reciprocal tariffs. Meanwhile, the U.S. imposes high tariffs on various products, like 197.04% on sour cream and 183.87% on tobacco, averaging 114.80% on peanuts.
Key Sectors in India-US Trade Deal Talks
Discussing tariffs necessitates addressing the sectors affecting the India-US trade deal, particularly agriculture. Trump demands India open its markets with lower tariffs. Yet, at 39%, India's agriculture tariffs are competitive compared to Switzerland's 28.5% and Japan's 57%. For dairy and agricultural products, tariffs in India range from 33% to 110-150%, whereas, in the EU, they range from 37.5%-261%, Japan has 61.3%-298%, and South Korea charges 54%-800%. On chemical products, India charges 0-10%, while China's range is 5-15%.
