US President Donald Trump did not include India in the initial list of tariff hikes announced on Friday. The new tariffs impose a 25% duty on imports from Mexico and Canada and a 10% duty on Chinese imports, citing a “high trade deficit” as the reason.
These measures, which take effect from February 1, target nations with the largest contributions to the US trade deficit. China leads with a 30.2% share, followed by Mexico at 19% and Canada at 14%. India, ranking ninth, accounts for just 3.2% of the deficit, as per data from the Research and Information System (RIS), The Indian Express reported.
During a press briefing, Trump explained, “We have significant trade deficits with all three countries. In one case, they are sending enormous quantities of fentanyl, which is killing hundreds of thousands of people annually. The other two facilitate the entry of this dangerous substance. We have around a $200 billion deficit with Canada and a $250 billion deficit with Mexico.”
According to the Economic Survey released on Friday, India’s import tariff policies have evolved over time, balancing domestic priorities with global trade integration. The survey highlighted that tariff structures differ across sectors to safeguard sensitive industries while ensuring access to essential raw materials. It also noted that India’s tariff policies remain compliant with WTO regulations and have undergone several reforms to streamline duties and correct inverted duty structures.
A report by the Peterson Institute for International Economics, published on January 17, warned that a 10% US tariff on China, followed by retaliatory measures from Beijing, could shrink the US GDP by $55 billion over four years, while China could face a $128 billion loss. The report also projected a 20 basis point rise in US inflation, with China experiencing an initial dip before inflation increases by 30 basis points due to temporary monetary policy adjustments aimed at stabilizing its currency.
Meanwhile, in December, NITI Aayog CEO BVR Subrahmanyam suggested that trade shifts under the incoming Trump administration could create economic opportunities for India through global trade diversions.
