Countdown to U.S. reciprocal tariffs: What to Expect

President Donald Trump. File.
| Photo Credit: AP

With hours to go for the U.S. announcement on “reciprocal tariffs” that have been touted by U.S. President Donald Trump since he came to office as a way to “tax them as they tax us” — referring to countries that impose tariffs on U.S. goods imports — the White House is set to unveil the plan at a Make America Wealthy Again event. The announcement will take place in the Rose Garden at 4 p.m. U.S. EST (1:30 a.m. IST on Thursday) and are due to go into effect immediately, according to the White House. 

What is the U.S. expected to do?

While officials have been tight-lipped about the final announcement due to be made, here’s what is expected, per various comments by senior Trade and Treasury officials in the last few weeks: 

1. Identification of countries to be targeted with tariffs. While Treasury Secretary Scott Bessent has referred to the “Dirty 15” that have the highest trade deficits with the US, others have suggested the list will be based on the average tariffs they charge.
2. A single figure of tariffs to be imposed on each of those countries identified — this could either be a blanket figure of 20%, according to some news agency, or a structured number for each countries based on the differential in average tariffs with the U.S. average of tariffs. According to the USTR, U.S. currently has a “trade-weighted average import tariff rate of 20% on industrial goods”, with half of imports coming in duty-free.
3. Possible additional tariffs to be placed on the basis of Non-Tariff Barriers, Market access issues, as well as those tariffs that Mr. Trump has been threatening over the past few weeks, i.e. on energy imports from Venezuela and Russia.
4. Deferrals of the reciprocal tariffs for certain countries, or even waivers, are based on the actions they have taken thus far or trade negotiations that are ongoing. This is still a guessing game, given that White House Press Secretary Karoline Leavitt has said that Mr. Trump was imposing tariffs to address “decades of unfair trade practices that have ripped [the U.S.] off and American workers off”, and therefore unlikely to change them due to recent remedial action.

What should India prepare for?

India hopes for some sort of exceptional treatment, given Prime Minister Narendra Modi’s visit to Washington and talks with Mr. Trump in February, and the launch of talks for a Bilateral Trade Agreement (BTA) since then. In a statement issued at the end of the last round of talks March 25-29 in Delhi between U.S. Trade Representative (USTR) officials and Commerce Ministry officials, the government said they had “broadly come to an understanding” on the next steps for the BTA, and hoped to finalise the first tranche or part of it by Fall 20205 (September-November). 

The statement said they would now start negotiations sector-by-sector virtually, and also hold talks on issues like “increasing market access, reducing tariff and non-tariff barriers and deepening supply chain integration”.

Even so, statements from the White House, including Mr. Trump himself, indicate India is seen amongst the “worst offenders” on trade, and has been singled out for both high tariffs (applied tariff rate was 17.0 percent in 2023 by WTO figures) and the bilateral trade deficit ($45.7 bn) in its favour.

On March 31, Ms. Leavitt addressed the White House press corps holding up a chart which she said showed the worst “tariff offenders”, including “50% from the European Union on American dairy, 700% tariff from Japan on American rice, a 100% tariff from India on American agricultural products, and nearly a 300% tariff from Canada on American butter and American cheese”.

The figures were referred to in the 2025 National Trade Estimate Report on Foreign Trade Barriers released by the USTR on March 31..

Excerpts from the chapter on India:

• India’s average Most-Favored-Nation (MFN) applied tariff rate was 17% in 2023 (latest data available), which was the highest of any major world economy, with an average applied tariff rate of 13.5% for non-agricultural goods and 39% for agricultural goods.

• India’s World Trade Organization (WTO) bound tariff rates on agricultural products are among the highest in the world, averaging 113.1% and ranging as high as 300%.

• India has repeatedly raised import restrictions, tariffs, surcharges and taxes on products ranging from electronics to farm produce.

• India maintains various forms of non-tariff barriers: banned or prohibited items that are denied entry into India (e.g., tallow, fat, and oils of animal origin); items that require a non-automatic import license (e.g., certain livestock products, pharmaceuticals, certain chemicals, certain information technology products); and items that are importable only by government trading monopolies and are subject to cabinet approval regarding import timing and quantity (e.g., corn under a tariff-rate quota).

• The United States has raised concerns about the science and risk basis for India’s sanitary and phytosanitary-related trade barriers to food and agricultural imports, impeding agricultural products (including dairy products, alfalfa hay, and other feed grains) into the Indian market. In addition, the U.S. has raised similar concerns about India’s policy on Genetically Modified foods.

• U.S. raised concerns over lack of Intellectual Property rights concerns as well as taxes on digital services including the 6% Digital Equalisation Levy and data localisation requirements, and has put India on its “Priority Watch List”.

New Delhi should expect to be asked to address each of these concerns if it wants to avoid being penalized by the Trump administration.

What has India done thus far:

1. Begun talks for a Bilateral Trade Agreement (BTA) to address most of the issues.
2. Reduced tariffs on a number of items including US alcohol, motorcycles and other goods. 
3. According to officials privy to the negotiations, the Indian side has indicated willingness to reduce tariffs on about half of the current line of goods being imported.
4. India may also discuss if it can forego some of the extra surcharges, the digital tax, production-linked incentives etc.
5. India is also willing to discuss market access for agricultural goods and dairy products, thus far considered a no-go area.
6. India is in negotiations for early FTA deals with E.U., U.K., Australia, new Zealand and others along with the U.S., and will be expected to offer similar concessions to all.

Facing pressure from farmers’ groups over the plans, External Affairs Minister S. Jaishankar acknowledged their concerns but emphasized that negotiators should be “trusted” to negotiate the “best possible deal” for India.

India’s response to any tariffs imposed will also be watched closely. China has already retaliated to tariffs with major counter-tariffs, as have Canada and Mexico. European Union leaders have said the E.U.’s response to any U.S. tariffs will be “unitary, proportionate and robust”.

When the previous Trump administration had revoked India’s ‘GSP’ status overnight, India slapped the U.S. with a number of retaliatory tariffs. However, this time around, the response to U.S. tariffs on steel and aluminium, the restrictions on energy purchases, etc. have been met with silent acceptance from New Delhi, and it remains to be seen what the reaction to the announcements overnight will be.