Donald Trump's tariffs & travel: Will your next US trip get more expensive? All details here

US President Donald Trump announced the imposition of a 26% reciprocal tariff on Indian imports, aiming to address what he perceives as unfair trade practices by countries with higher tariffs on American goods. This move is part of a broader strategy targeting multiple nations, including China, the European Union, South Korea, Japan, and Taiwan, with varying tariff rates.

President Trump has long criticised countries like India for imposing high tariffs on US products. For instance, India charges a 70% tariff on passenger vehicles and a 50% tariff on apples, while the US imposes only 2.5% and zero tariffs on these Indian goods, respectively. The US presently has a $46 billion trade deficit with India, according to the reports. The Trump administration hopes to promote more equitable practices and rebalance trade relations by enacting these reciprocal tariffs.

Impact on Indian export sectors The 26% tariff is expected to affect several key Indian export sectors:

Electronics: This industry is expected to face higher prices and less competitiveness in the US market, as it accounts for about $14 billion in exports to the US.

Gems and jewellery: With $9 billion in exports, this sector may see a decline in demand if US consumers' costs rise.
Auto parts and aluminium: These industries' export potential will be impacted by an additional 25% tariff.

Notably, the pharmaceutical industry, which exports over $9 billion to the US each year, has been spared from these levies, which has given Indian exporters some respite.

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Even while the 26% tax is substantial, it is not as high as the tariffs levied against other Asian nations. For instance, Vietnam is subject to a 46% tariff and China is subject to tariffs of above 50%. This implies that, despite being affected, India's export industries may be less susceptible than those of some of its neighbours in the region.

Government and industry response The Indian government, under Prime Minister Narendra Modi, is likely to engage in negotiations with the US to mitigate these tariffs and address trade imbalances. Industry groups in India view the tariffs as manageable, especially when compared to the higher rates faced by other nations. However, there is an acknowledgment that certain sectors will need to adapt to the new trade environment.

Potential opportunitiesIt's interesting to note that India stands to gain from the US's increased tariffs on Chinese imports. As companies seek to diversify their supply chains away from China, India could position itself as an alternative manufacturing hub, particularly in sectors like textiles, footwear, and iron and steel.

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Impact on travellersBeyond trade, these tariffs could have implications for Indian travelers to the US. Products that are popular with Indian tourists may become more expensive as a result of the rising cost of Indian items in the US market. Additionally, travel advice and visa regulations may be indirectly impacted if trade disagreements cause diplomatic ties between the two nations to deteriorate. Travellers should keep up with these changes and make appropriate plans.