U.S.-India Trade Relations

By Andrea Shalal

WASHINGTON (Reuters) – India’s high tariffs restrict imports, said Kevin Hassett, U.S. President Donald Trump’s top economic adviser. He indicated that Prime Minister Modi has significant discussions ahead with Trump during their upcoming meeting.

Hassett remarked that Trump favors imposing reciprocal tariffs matching those of other countries, stating, “If they go down, we’ll go down.” He highlighted that most trading partners, like Canada, Mexico, and Britain, have similar tariffs to the U.S., while countries like Taiwan and India maintain much higher rates.

Recent reports indicate that Modi is considering additional tariff cuts ahead of his two-day visit to Washington starting Wednesday. Trump announced plans to impose new 25% tariffs on all steel and aluminum imports into the U.S., alongside reciprocal tariffs to be announced soon.

Trump has previously criticized India as a “very big abuser” in trade and has encouraged India to purchase more American-made security equipment to foster a fair trade relationship.

India is evaluating tariff cuts across various sectors, including electronics and medical equipment, to enhance U.S. exports in line with its domestic production initiatives, according to three government officials.

Furthermore, India plans to increase energy product imports from the U.S., estimated at over $11 billion in the first eleven months of 2024, to address trade imbalances. As a major importer of liquefied natural gas (LNG), India may urge its oil companies to buy more U.S. LNG following the Trump administration’s lift of export permit bans for new projects.

According to the World Trade Organization, India’s average tariff rate stands at 17%, compared to approximately 3.3% for the U.S. On a trade-weighted basis, India’s rate is around 12%, while the U.S. rate is about 2.2%.

Hassett also expressed concern that the Biden administration had issued waivers from previously imposed steel and aluminum tariffs. He noted that under Trump’s first term, steel capacity increased significantly. He commented, “So President Trump, as he can do, is like, ‘Okay, so let’s just stop the waivers, and he’ll do so at a time of his choosing.'”