By Ashok Gulati, Harsh Wardhan & Sulakshana Rao

US President Donald Trump’s latest push for “reciprocal tariffs” is aimed at reducing trade deficits and aligns with his broader “America First” policy. In 2024, the US trade deficit surged to $918.4 billion, from $784.9 billion in 2023. The highest deficit recorded was with China at $295.4 billion and India accounted for only $45.7 billion. However, Trump has frequently criticised India’s high tariffs and trade barriers on American goods, referring to India as a “tariff king”. During Prime Minister Narendra Modi’s recent US visit, Trump reiterated that India would not be exempt from these proposed tariffs, which are designed to match the import tariffs that other countries impose on US goods.

We don’t know yet whether these reciprocal tariffs will be on all goods, sector by sector, or commodity by commodity. But it is better to prepare for the worst and hope for the best. According to World Trade Organization data, India imposes significantly higher tariffs than the US with a simple average rate of 17% on all goods compared to about 3.3% imposed by the US (see graphic). The trade-weighted tariffs further highlight this gap — 12% in India vs. 2.2% in the US. However, the most striking difference is in the agriculture sector, where India’s tariffs are notably higher. The simple average tariff is 39% and the trade-weighted average is 65%. In comparison, the US maintains relatively low agricultural tariffs, with a simple average of 5% and a trade-weighted rate of 4%. Given this stark tariff disparity in........

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