India's pharma industry gets relief from Trump's reciprocal tariff

US President says India imposes 52% tariff on American imports and engages in currency manipulation and non-tariff barriers

US president Donald Trump exempted imports of pharmaceuticals, energy and certain minerals in his “reciprocal tariffs” on Thursday, likely providing reprieve to India’s generic medicines industry.

 

"Some goods will not be subject to the Reciprocal Tariff. These include: (1) articles subject to 50 USC 1702(b); (2) steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs; (3) copper, pharmaceuticals, semiconductors, and lumber articles; (4) all articles that may become subject to future Section 232 tariffs; (5) bullion; and (6) energy and other certain minerals that are not available in the United States," the White House said in a factsheet.

   

Trump on Thursday announced a 26 per cent reciprocal tariff on India, claiming the country imposes a 52 per cent tariff on American imports and engages in currency manipulation and non-tariff barriers. India is among countries on which Trump has imposed substantial tariffs ranging from 46 per cent on Vietnam and 17 per cent on Philippines which will kick in from April 9. Rest of the world will face a uniform 10 per cent reciprocal tariff on all exports to the US which will kick in from April 5.

 

Citing examples of India’s high tariffs, the White House in a factsheet highlighted the country’s 70 per cent tariff on passenger vehicle imports, 10-20 per cent levy on networking switches and routers, 80 per cent on rice in the husk, 50 per cent on apples imported from the US.

 

“India imposes their own uniquely burdensome and/or duplicative testing and certification requirements in sectors such as chemicals, telecom products, and medical devices that make it difficult or costly for American companies to sell their products in India. If these barriers were removed, it is estimated that U.S. exports would increase by at least $5.3 billion annually,” the factsheet said.

 

Though the US said India’s average most-favored-nation tariff rate is 17 per cent, the 26 per cent reciprocal tariff also factored in the trade imbalance between both the countries.

 

“To conceptualize reciprocal tariffs, the tariff rates that would drive bilateral trade deficits to zero were computed…Regulatory barriers to American products, environmental reviews, differences in consumption tax rates, compliance hurdles and costs, currency manipulation and undervaluation all serve to deter American goods and keep trade balances distorted,” the US Trade Representative said explaining the rationale behind the reciprocal tariff calculations.