India gains edge as Trump delays tariff hike; China left out of 90-day reprieve

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The proposed increase in tariffs on all products – 26% tariff on most goods exports to the U.S. in India’s case – from these countries will not be applicable for 90 days now.
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India gains edge as Trump delays tariff hike; China left out of 90-day reprieve
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On April 9, the day when U.S President Donald Trump’s broad stroke tariff hike across trading partners worldwide was expected to kick in, Trump pressed a pause button. The proposed increase in tariffs on all products – 26% tariff on most goods exports to the U.S. in India’s case – from these countries will not be applicable for 90 days now.

Trump’s rationale for a temporary pause on the punitive measures announced by him early this month is that majority of these countries – more than 75 of them – have initiated talks with ‘Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to trade, trade barriers, tariffs, currency manipulation, and non-monetary tariffs’. In a message on social media platform Truth Social’, Trump pointed out that these countries (which include India) have not retaliated in any way, shape, or form against the United States, after he announced the tariff measures against them. All these countries will now be subjected to a ‘base’ reciprocal tariff of 10% during this period.

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India has reasons to feel relieved. First of all, the country was amongst the first to start negotiations with the U.S for a Bilateral Trade Agreement (BTA), even before the quantum and scope of Trump’s tariff measure were known. Trump and Indian Prime Minister Narendra Modi has already announced their intention to announce some kind of early agreement in August-September 2025, which perfectly fits into the 90 day freeze on tariff hikes announced by the U.S. Hopefully, even if the tariff hike takes effect after three months, India will face a different treatment based on the outcome of BTA discussions.

Secondly, some of India’s products will become more competitive in the U.S. market as the moratorium of tariff does not apply to China, the biggest supplier of those products in that market. In fact, Trump has raised the tariff charged to China to 125% accusing that country of showing ‘lack of respect’ towards U.S. decision to levy reciprocal tariffs on its trade partners. China has also raised tariffs on U.S. products to 84% making U.S. products also more expensive to be imported to that country. According to an analysis done by consultancy PwC India, India vis-a-vis China benefit could reflect on export of products that come under categories like electrical machinery and equipment, machinery and mechanical appliances and textiles and apparels.

Experts also say the U.S-China trade war can also be beneficial for India if a meaningful bilateral partnership can be developed between India and China. “India can benefit economically by partnering with China in sectors like chemicals, machinery, and electronics. Sharing inputs and production could boost exports and local value addition—a practical win-win”, says Ajay Srivastava, founder of New Delhi based think tank Global Trade Research Institute.

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