The Commerce Department is minutely scrutinising every provision of ‘America First Trade Policy’ notified this week by US President Donald Trump, including tariff threats, to see what impacts India negatively as well as positively and to prepare accordingly to deal with it, sources have said.
Inputs will be sought from other Ministries and Departments on their assessment of the situation, but the government will wait for the US to take some concrete action affecting India before finalising its own, a source tracking the matter told businessline.
“We are studying the memorandum to see what are the provisions that may impact India. There may be many things that have no impact. There may be things that might positively affect India. And there may be things that might be a concern for the country. This has to be evaluated first,” the source said.
The provision on addressing unfair and unbalanced trade in the policy may be of some concern to India as it calls for investigation of the causes of the US’ large and persistent annual trade deficits in goods. It says that the US Department of Commerce should recommend appropriate measures, such as a global supplemental tariff or other policies, to remedy such deficits.
Further, the policy talks about carrying out government investigations on the feasibility of establishing and recommending the best methods for designing, building, and implementing an External Revenue Service (ERS) to collect tariffs, duties, and other foreign trade-related revenues.
Trade surplus
As India has a trade surplus of over $35 billion with the US, it could be affected by such investigations but nothing was for sure yet, the source added.
“There is no need of a knee-jerk reaction from India as Trump has asked the US Commerce Secretary, US Treasury Secretary and the US Trade Representative to give their reports on the various trade-related investigations by April 1, 2025,” the source pointed out.
The government has already been holding consultations with the industry to identify items where there was scope of some tweaking of duties to meet America’s interests as well as point out areas where concessions can be sought.
The America First Trade Policy has criticised China’s trade and intellectual property rights policies but not mentioned India directly anywhere.
For the next two-and-a-half months, India will closely study US’ trade policy and see actions that the country takes vis-a-vis other trade partners.
Trump tariffs
On the day of his swearing in, Trump announced 25 per cent tariffs on imports from Canada and Mexico, to be implemented from February 1, for failing to stop illegal immigration into the US.
On Tuesday, Trump said he would impose tariffs on the European Union. “The European Union is very very bad to us…So they are going to be in for tariffs,” he said at a press briefing. He also said his administration was discussing a 10 per cent punitive duty on Chinese imports because fentanyl was being sent from China to the US through third countries such as Mexico and Canada.
“India will study all US policies and actions and also keep weighing various responses through inter-Ministerial consultations and dialogue with the industry,” the source added.
