India expects breakthrough on additional 25% US tariffs within two months, says CEA Nageswaran

Chief Economic Advisor (CEA) V Anantha Nageswaran on Thursday said he expects the dispute over an additional 25% tariff imposed by the United States to be resolved within the next couple of months, with talks currently underway between New Delhi and Washington.

“I don’t have any inside info, but expect a resolution to the additional 25% US tariff in the next couple of months. In 8-10 weeks, we will likely see a solution to an additional penal tariff imposed by the US. Conversations are going on between the two governments, India and the US,” Nageswaran said while speaking at an event in Kolkata.

He also indicated that reciprocal Indian tariffs could eventually be adjusted “somewhere between 10% and 15%.”

Negotiations between the two countries began on September 16, when chief negotiators from India and the US started discussions on a proposed trade agreement aimed at ironing out disputes triggered by steep tariff measures that have unsettled exporters.

He highlighted India’s export growth, currently at USD 850 billion annually, is on track to reach USD 1 trillion, representing 25 per cent of GDP, indicating a healthy, open economy.

Trump had invoked the International Emergency Economic Powers Act (IEEPA), a 1977 law crafted for sanctions and financial controls in times of foreign emergencies, to impose reciprocal tariffs on dozens of countries. India was slapped with 25 per cent tariffs, but the rate of tariffs was increased to 50 per cent.

The 50 per cent tariffs on imports from India to the United States came into effect on Wednesday.

The higher duties are applicable to all Indian products that are either entered for consumption in the US or withdrawn from warehouses for consumption. With this, the 50 per cent tariffs on India’s imports to the US are now in effect.

The US Customs notification also highlighted that while most products from India will face the higher duties along with any other applicable charges like antidumping or countervailing duties, some items are excluded.

It covers certain products listed separately in the U.S. tariff schedule. Items made of iron and steel, including some of their derivatives, will not face the additional duty. The same applies to aluminium products and their derivatives.

Passenger vehicles such as sedans, SUVs, crossovers, minivans, cargo vans, and light trucks are also exempt, along with their spare parts. In addition, semi-finished copper products and some intensive copper derivatives are excluded from the higher tariffs.

In short, while the 50 per cent tariff broadly applies to Indian imports, key categories like iron, steel, aluminium, vehicles, parts, and copper products have been kept out of its scope.

According to a report by the Global Trade Research Initiative (GTRI), about 30.2 per cent of India’s exports to the United States, valued at USD 27.6 billion, will continue to enter the U.S. market duty-free despite the imposition of higher tariffs.

With inputs from agencies