US President Donald Trump floated new universal tariffs of 25 per cent on autos, drugs and chips, saying they could come as early as April. With this proposal, trump escalated his tariff rhetoric. In response, India has called for a bilateral meeting with the US to discuss trade ties.

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Japan raises auto tariff issue with US

Japan has raised auto tariffs concerns with the US, seeking concessions. In the next report, we look at if trump's tariff strategy as leverage to negotiate deals is working.  A day after reiterating on reciprocal tariffs, trump proposed new universal taxes on imports of autos, semiconductors and pharmaceutical drugs.

April is fast becoming a starting point for these US tariffs to kick in. However, there is no clarity on the details of trump's new proposal. India and Japan have rushed to negotiate trade ties before these taxes come into effect.

Ahead of Indian prime minister Narendra Modi’s US visit, the country had lowered import duties on high-end motorbikes and bourbon whiskey from America. India's concessions so far to the US come even before the reciprocal tariffs. Trump has called India the tariff king even as he acknowledged the recent cuts by the country.

Citi group research pegs India’s losses from trump's reciprocal taxes at 7 billion each year. Indian exporters of autos to agriculture are feeling anxious ahead of April, when these tariffs are expected to take effect.

Citi analysts say the most vulnerable are chemicals, metal products, and jewellery, followed by automobiles, pharmaceuticals, and food products. Modi and trump agreed to double India-US trade 500 billion dollars this decade and pledged to negotiate a deal soon.

Citi estimates India charged US imports an average of 11 per cent, around 8.2 percentage points higher than US tariffs on Indian exports. US manufacturing exports to India, valued at nearly 42 billion dollars last year, face significantly higher tariffs.

This ranges from 7 per cent on wood products and machinery to as much as 15 to 20 per cent on footwear and transport equipment and nearly 68 per cent on food items. A White House fact sheet highlighted India’s high tariffs on US farm goods and motorbikes.

India's agricultural and food exports would be among the most severely affected if the US were to implement reciprocal duties. While India prefers to use tariffs on imported goods to boost domestic manufacturers, trump's zero-sum mentality stems from America’s uneven trade math with both allies and foes.

The US President has delayed tariffs on America’s neighbouring countries; however, he is still focused on bringing down the trade deficit significantly. The shock and awe strategy seems to bring mixed reactions.

The European union and China threatened tariffs on the US and warned trump's protectionist trade war would lead to worldwide recessions. Economists have also warned of inflationary concerns from trade wars. Uncertainty around the impact has markets, businesses and countries anxious, with some already caving in from the pressure.

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(With inputs from the agencies)