US Suspends Tariffs on India for 90 Days, Provides Relief for Exporters

The US has announced the suspension of additional tariffs on India for 90 days until July 9 this year, according to the White House executive orders.

On April 2, US President Donald Trump imposed universal duties on about 60 countries exporting goods to America and additional steep levies on countries like India, potentially impacting sales of products from shrimp to steel in the world’s biggest economy. The move was aimed at reducing its trade deficit and boosting domestic manufacturing.

The US imposed an additional import duty of 26% on India. The tariffs were also high on its competitors like Thailand, Vietnam, and China.

This suspension of tariffs does not apply to China, including Hong Kong and Macau.

"Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Daylight Time on April 10, 2025, enforcement of the second paragraph of Section 3(a) of Executive Order 14257 is suspended until 12:01 a.m. Eastern Daylight Time on July 9, 2025," the order said.

The second paragraph of Section 3(a) of the executive order issued on April 2 mentions the implementation of reciprocal tariffs. It includes Annex 1, listing the rate of tariffs for different countries.

However, the 10% baseline tariff imposed on the countries will continue to remain in place.

"Since I (President) signed Executive Order 14257, in contrast to the PRC’s actions, more than 75 other foreign trading partners, including countries enumerated in Annex I to Executive Order 14257, have approached the United States to address the lack of trade reciprocity in our economic relationships and our resulting national and economic security concerns.

"This is a significant step by these countries toward remedying non-reciprocal trade arrangements and aligning sufficiently with the United States on economic and national security matters," the order dated April 9 said.

A trade expert mentioned that the 25% duty on steel, aluminium (effective from March 12), and auto and auto components (from April 3) continues.

Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai stated that semiconductors, pharmaceuticals, and certain energy products are under the exemption category.

Commenting on the 90-day deferral of reciprocal tariffs, Indian exporters said the US decision has come as a major relief, as it provides a crucial window for pushing talks on the proposed bilateral trade agreement between India and America.

They emphasized that diplomatic engagement and fast-tracking negotiations for the trade pact will help India manage these tariffs.

"It is a good decision by the Trump administration. We have been assured by the commerce ministry that the agreement will be finalized at the earliest," FIEO President S C Ralhan said.

Amid a global market downturn, Trump on Wednesday abruptly backed down on his tariffs on most nations for 90 days but raised the tax rate on Chinese imports to 125%.

In a meeting with industry and exporters on April 9, Commerce and Industry Minister Piyush Goyal asked exporters not to panic and assured them that India is working on the "right mix and right balance" in its proposed trade agreement with the US.

He said the Indian team is working with "speed" but not in "undue haste" to ensure the right outcome for the country.

The two countries are negotiating a bilateral trade agreement (BTA) aiming to more than double their trade to $500 billion by 2023, from about $191 billion at present. They are aiming to conclude the first phase by the fall (September-October) this year.

The minister assured that the country is working proactively and exploring solutions in the best interest of the nation.

The Indian team working on BTA is exploring the right mix and the right balance and he encouraged exporters to not panic and look at the silver lining in the present scenario.

In fiscal 2023-24, the US was the largest trading partner of India, with $119.71 billion in bilateral trade in goods ($77.51 billion worth of exports, $42.19 billion of imports, and $35.31 billion trade surplus).

China was the second-largest trading partner, with $118.39 billion in two-way commerce ($16.65 billion in exports, $101.73 billion in imports, and $85 billion trade deficit).

The US accounts for about 18% of India’s total goods exports, 6.22% in imports, and 10.73% in bilateral trade. In contrast, China’s share is just about 4% in exports and a staggering 15% in imports.