The U.S. government's decision to impose a 27% tariff on nearly all Indian goods has left Indian trade economists and politicians reeling. This tariff, communicated by President Trump while addressing Prime Minister Narendra Modi, was surprising and marks a drastic measure reflecting accusations that India hampers U.S. companies' sales efforts. Although India enjoys a trade surplus with the U.S. of $46 billion, it struggles with an overall negative trade balance, making any policy adjustments in response particularly challenging and painful for the country.
Starting next week, nearly all Indian goods arriving in the United States will be taxed an extra 27 percent, which poses significant trade challenges for India.
The Trump administration accused India of using uniquely burdensome methods to complicate American companies' efforts to sell their products in India.
India sells more to the United States than it buys, but its overall balance of trade is negative, complicating the adjustment of trade policies.
Politicians in India are stunned by the unexpectedly high tariffs imposed, with the Indian government now left to figure out a response.
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