Trump's stubbornness will shatter all the hopes of India, there could be a loss of about 61 thousand crores in a year

US President Donald Trump's threat and insistence on imposing reciprocal tariffs from early April is creating anxiety in India's exporting sectors from auto to agriculture. 

Analysts at Citi Research estimate that the potential loss could be around $7 billion per year, or about Rs 61 thousand crores. Government officials are waiting to know how the tariffs will be calculated before they can assess their full economic impact. 

Citi Research analysts say that they are working on the US trade agreement proposal to cut tariffs and increase two-way trade, as well as preparing a plan to counter them. Let us also tell you which sectors of India can be affected by Trump's reciprocal tariffs.

Sectors at risk

Citi analysts say chemicals, metal products and jewellery are at greatest risk from Trump's reciprocal tariffs, followed by automobiles, pharmaceuticals and food products. 

India's merchandise exports to the United States are estimated at about $74 billion in 2024, including pearls, gems and jewellery worth $8.5 billion, pharmaceuticals worth $8 billion and petrochemicals worth about $4 billion. 

India could impose an average tariff of about 11 per cent in 2023, about 8.2 percentage points higher than US tariffs on Indian exports, Citi Research estimates.

What does America export to India?

US manufacturing exports to India, valued at about $42 billion in 2024, will face significantly higher tariffs, ranging from 7 per cent on wood products and machinery to 15 per cent to 20 per cent on footwear and transport components, and up to about 68 per cent on food items.

In a fact sheet last week, the White House said the US' average applicable Most Favoured Nation (MFN) tariff on agri products was 5 per cent compared to India's 39 per cent. 

India has set a 100 per cent tariff on US motorcycles, while the US tariff on Indian motorcycles is only 2.4 per cent, a Citi Research report said.

How much will it affect the agriculture sector

If the United States decides to impose reciprocal tariffs on a broader range of agricultural products, India's farm and products exports – where tariff differences are highest but trade volumes are low – would be among the hardest hit.

Textiles, leather and wood products

Labor-intensive industries such as textiles, leather, and wood products face relatively little risk due to small tariff differences or a limited share of US-India trade.

In addition, many US companies make these products in South Asia and benefit from India's free trade agreements, which allow them to sell in the domestic market at lower tariffs.

what is the worst that could happen

In a worst-case scenario of a 10 per cent uniform tariff hike by the United States on all goods and services imported from India, the Indian economy could suffer a shock of 50 basis points to 60 bps, which is estimated to result in an 11% to 12% drop in imports, Standard Chartered Bank economists were quoted as saying in a media report.

What can India offer?

To ease this trade tension, India has already cut tariffs on several items, for example from 50 per cent to 30 per cent on high-end motorcycles and from 150 per cent to 100 per cent on bourbon whiskey, while promising to review other tariffs, increase energy imports and buy more defence components.