Trump Imposes Reciprocal Tariff; Panjab Basmati Farmers Hit

On 2 Apr, US President Donald Trump imposed Reciprocal Tariffs on over 180 countries. Explaining the rationale behind the tariff hike, President Trump said, ‘For far too long, other countries have looted and plundered us, while taking advantage of our policies. But no longer. April 2^nd will forever be known as Liberation Day.’ The US has imposed a 10% tariff across most countries ‘due to security concerts that have arisen due to persistent trade deficits’. Canada, Mexico, Russia, Cuba, Russia and other countries have been left out of these new tariffs because they face earlier tariffs or blockades. Countries on whom high tariffs have been imposed are: Cambodia, 49%; Vietnam, 46%; Sri Lanka, 44%; Bangladesh, 37%; and Thailand, 36%. China has been slapped with a 34% tariff along with an already 20% earlier tariff, taking the total to 54%. Describing tariffs by India as 'very tough', President Trump said, 'Their Prime Minister (Narendra Modi) just left (US recently)...he is a great friend of mine, but I said to him that 'you're a friend of mine, but you've not been treating us right'. India charges us 52%, so we will charge them half of that, 26%.' It must be noted here that tariffs on different sectors vary and 26% is a weighted average. Among the Indian sectors on which new tariffs are levied are: telecom and networking equipment, gems and jewellery, automobiles and textiles. On the eve of Liberation Day, the White House said, ‘India charges 100% tariff on agricultural products.’ How the new tariffs affect India’s agricultural sector are yet to be seen, but Panjab’s Basmati sector which has 50% share in exports will face a cascading effect on both exporters and farmers. In general, the pharmaceutical sector has been exempt from the new tariff. India has not yet responded. Since the reciprocal tariff rates were announced, USD 10T has been wiped off major markets, including India’s (earlier coverage).