April 3, 2025: In a move that has sent shockwaves through India’s economy, US President Donald Trump has imposed a steep 26% reciprocal tariff on all Indian goods entering the US. This drastic measure, announced during Trump’s Liberation day address, is a significant setback for New Delhi, which was hoping for tariff concessions rather than new trade barriers.

Starting from April 9, all Indian goods exported to the US will attract a minimum 26% levy. This tariff in addition to the existing 25% tariff on imported automobiles and auto parts, effective April 2 for car and light trucks, and May 3 for auto parts.

Trump justified the tariffs, claiming that India has been charging exorbitant tariffs on American goods while the US has been lenient for decades. “They (India) are charging us 52%, and we charge almost nothing for years and years and decades,” Trump said in his speech.

The reciprocal tariff could be a major headache for India, affecting several key sectors and impacting revenues of many companies. Automobiles, Pharmaceuticals and IT are some of the major sectors at risk.

India is considering slashing tariffs on $ 23 billion worth of US imports to soften the blow. However, no deal has been finalized yet. The coming few weeks will be crucial for India.