Category: International Relations & Economy | Target: OPSC Odisha Civil Services Examination
By: Brajabandhu Mahanta
In a key development for India-US trade relations, the United States has announced a 90-day suspension of additional tariffs imposed on Indian goods, offering a temporary relief to Indian exporters. According to a White House executive order dated April 9, 2025, the suspension is in effect from April 10 to July 9, 2025.
Background: Tariff Spree and Its Impact
On April 2, 2025, the US—under President Donald Trump—had imposed universal tariffs on around 60 countries, targeting nations with non-reciprocal trade arrangements. India faced an additional 26% import duty, severely impacting sectors like:
- Shrimp
- Steel
- Aluminium
- Auto and Auto Components
These were in addition to a baseline 10% tariff, which remains in place even during the suspension.
Notably, the tariff relief does not apply to China, Hong Kong, or Macau, which continue to face elevated tariffs up to 125%.
Suspension: A Strategic Window for Dialogue
The executive order clarified that countries like India had shown willingness to address trade imbalances and align with US economic and national security priorities. More than 75 nations, including India, reached out to the US to negotiate.
This gesture prompted the temporary suspension of reciprocal tariffs on select countries, including India, opening the door for intensified bilateral trade discussions.
India’s Response: Diplomacy in Action
Union Commerce and Industry Minister Piyush Goyal met industry stakeholders and urged exporters not to panic, assuring that India is moving with the “right mix and right balance” in finalising the Bilateral Trade Agreement (BTA) with the US.
“India is working with speed, but not in undue haste,” the minister said, adding that the government is actively negotiating for India’s economic interests.
Trade Agreement in the Works
India and the US are negotiating a BTA with an ambitious target of doubling trade to USD 500 billion, up from the current USD 191 billion. The first phase is expected to conclude by September–October 2025.
- Current India-US Trade (2023–24):
- Total Bilateral Trade: USD 119.71 billion
- Exports to US: USD 77.51 billion
- Imports from US: USD 42.19 billion
- Trade Surplus: USD 35.31 billion
- India-China Trade (2023–24):
- Total Trade: USD 118.39 billion
- Exports to China: USD 16.65 billion
- Imports from China: USD 101.73 billion
- Trade Deficit: USD 85 billion
Relief for Indian Exporters
Industry bodies such as the Federation of Indian Export Organisations (FIEO) welcomed the move. President S C Ralhan described the 90-day deferral as a major relief and a strategic window to push bilateral trade talks forward.
- Semiconductors, pharmaceuticals, and select energy products have been exempted from tariffs.
- India is also exploring diplomatic and financial tools to ensure the long-term easing of trade restrictions.
Why This Matters for OPSC Aspirants?
This development is crucial for understanding:
- India-US Economic Relations
- Impact of Tariff Wars on Emerging Economies
- Bilateral Trade Agreements
- India’s Export Strategy and Global Trade Diplomacy
It reflects India’s proactive diplomatic stance and showcases how international policy decisions affect domestic economy and employment, especially in sectors like MSMEs, steel, and agriculture.
Conclusion
The 90-day suspension of tariffs offers India not just temporary economic relief, but a valuable opportunity to secure a long-term trade agreement with one of its largest partners. With ₹500 billion trade potential and ongoing negotiations, India’s strategic diplomacy and resilience may lead to significant gains on the global stage.