Opinion Tariff Tracker, May 15: Trump claims Indian offer of ‘zero tariffs’ on American goods

India’s relations with the US

Trump has long maintained that India unfairly taxes the US, and said in February that India “does not treat the US right”.

This is significant given the volume of trade between the two nations – the US is India’s largest trading partner, while India is the US’s 10th-largest trading partner. Data from the US Trade Representative (USTR) shows that the US ran a trade deficit of $45.7 billion with India in 2024, an increase of 5.4% over 2023. (See Table)

Trump imposed 26% in “reciprocal tariffs” on India as part of his Liberation Day tariff announcement, which became effective on April 5. According to the White House, India charges a 70% tariff on passenger vehicle imports, 10-20% on networking switches and routers and 50% on rice in the husk. However, they were paused on April 9, along with duties on several other countries, excluding China.

The 25% tariffs on US imports of steel and aluminium would significantly hurt India. The Indian Express in March reported that the US is the largest market for Indian aluminium, with its exports amounting to $946 million in FY2024. These exports had exceeded $1 billion in the previous two financial years, and were up from just $350 million in 2016-17, around the time Trump first became President. Similarly, the US was also the largest market for Indian iron and steel articles, with Indian exports valued at $2.8 billion in FY2024.

Since February, India has made several overtures towards the US, slashing the duties on American imports like bourbon whiskey and Harley-Davidson motorcycles. And earlier this month, India proposed zero tariffs on some goods like auto components and pharmaceuticals on a reciprocal basis up to a certain quantity of imports, according to Bloomberg reporting.

India’s renewed assertive stance

Interestingly, India on Monday (May 12) made a submission to the World Trade Organization (WTO) reserving its right to impose retaliatory tariffs against the 25% US tariffs on Indian exports of steel and aluminium, as explained in our May 13 Tariff Tracker. In April, India had sought consultations with the US, describing the metals tariffs as ‘safeguards’ or trade restrictions. However, the US denied this assertion in a separate submission to the WTO, saying its tariffs were meant to bolster national security.

In its latest submission on Monday, India said that the US tariffs affect $7.6 billion worth of Indian exports into the US, on which $1.91 billion would be collected as duties. Therefore, India’s “proposed suspension of concessions would result in an equivalent amount of duty collected from products originating in the United States,” according to the document. It remains unclear what US products would be targeted.

The timing of this submission is significant: it came hours after the US and China finalised a trade deal, pausing mutual tariffs for 90 days and reducing the quantum of tariffs on each other by 115%.

On the other hand, a Bloomberg report, citing an unnamed source, said it was unlikely for India and the US to broker a trade deal before the 90-day pause ends in July. India’s position will likely see more clarity once Commerce Minister Piyush Goyal visits the US for trade talks later this week.