India takes on reciprocal tariffs, cuts duty on bourbon whiskey in latest move

The Union Budget presented earlier in the month has already reduced Customs duties on quite a few items. The most recent is the duty cut on bourbon whiskey

Hyderabad: US President Donald Trump has asserted that Washington will not spare India from reciprocal tariffs.

The US President, at a joint media briefing with the Indian Prime Minister Narendra Modi on February 14, said both sides are looking at striking a major trade deal soon while calling import duties imposed by India on certain US products as “very unfair” and “strong”.

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“Whatever India charges, we will charge them,” Trump said, adding “We are being reciprocal with India.”

During 2021-24, the US was the largest trading partner of India. During April-November 2024-25, the bilateral trade in goods between the two countries stood at $ 82.52 billion ($52.89 billion exports, $29.63 imports). The trade gap was $23.26 billion, which is in the favour of India.

The US accounts for about 18 per cent of India’s total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade.

Trump has already announced a 25 per cent duty on all steel and aluminium imports. It will come into effect from March 12.

Moody’s Ratings have stated that Indian steel producers will face increased challenges in exporting their products following the US decision to impose the 25 per cent tariff.

India’s average tariff rate of 17% is one of the highest among the big economies, as compared to 8% for China, 13% for South Korea, 11% for Brazil, and 5% for the European Union. The US has 3%.

According to the economic think tank Global Trade Research Initiative (GTRI), the US itself imposes high duties on several goods to safeguard its domestic markets.

Citing data from the World Trade Organisation’s World Tariff Profiles 2023, the GTRI has highlighted the significant tariffs the US places on products such as dairy (188 per cent), fruits and vegetables (132 per cent), cereals and food preparations (193 per cent), oilseeds, fats, and oils (164 per cent), and beverages and tobacco (150 per cent).

Other goods, including coffee, tea, cocoa, and spices, face tariffs of 53 per cent, while fish products and chemicals are taxed at 35 per cent and 56 per cent, respectively.

GTRI founder Ajay Srivastava has noted that some countries, including the US, Japan, and South Korea, impose steep tariffs on certain goods, with rates as high as 350 per cent, 457 per cent, and 887 per cent, respectively.

India’s Actions

The Budget presented earlier in the month has already cut customs duties on quite a few items making imports entry cheaper. Here’s what steps India has taken so far:

• Luxury cars, including station wagons and racecars, priced above $40,000, now attract a duty of 70% over the earlier 125%
• Import duty on high-end motorcycles reduced to 40% from 50%
• Duty on semi-knocked down (SKD) kits cut to 20% from 25%; completely knocked down (CKD) units to be taxed at 10% from 15%
• Basic Customs duties for the lithium-ion batteries used for electric vehicles in India totally scrapped

Who benefits: Both Tesla and Harley Davidson, who are significant players in Trump administration
Mobile phone

• 28 items in mobile phone battery production exempted from Customs duty that arrive from countries like the US or China.

Who benefits: America’s Apple, which cornered a 23% share in total revenue from India during 2024

Bourbon whiskey

• Tariffs reduced from 150% to 100%
• The US accounts for about one-fourth of all such liquor imports in India
• India imported bourbon whiskey worth $2.5 million in 2023-24
• In 1964, bourbon whiskey, made from corn, rye or wheat and malt, was declared a ‘distinctive product of the United States’

Who benefits: US brands like Suntory’s Jim Beam, Woodford Reserve

With inputs from PTI