India's Protectionary Tariffs

In his address to Congress Tuesday, U.S. President Donald Trump announced reciprocal tariffs for April 2, meaning the country is looking to match trade barriers it itself experiences with partners. This is bad news for India, the most highly tariffed major economy in the world. India is in trade agreement talks with the U.S. at the moment (as well as with the European Union and the United Kingdom). This, and concessions already made by the country, did not stop Trump from mentioning India in particular as a target for potential tariff matching.

At the beginning of the month, the country already did away with some of its peak tariffs of 100-150 percent, including on bourbon whiskey, and also lowered the tax on motorcycle imports from 50 percent to 30 percent. This reportedly lowered India's average tariff rate from around 11.5 percent to 10.6 percent already. Imports of whisky were also reported to be a sticking point in talks with the British government.

However, the new lower rate is still many times higher than those in North American or European countries. India has defended itself saying that its rates for minerals and petroleum are not as steep, at around 10 percent on average, and that those subcategories favored by U.S. importers are even below that.

The most recent Foreign Trade Barriers report by the U.S. Trade Representative, for example, complains of India's high tariffs on vegetable oils, many agricultural products, automobiles, coffee and rubber as well as important medications also incurring a custom fee of 20 percent at times. A look at the World Trade Organization tariff chart for the country reveals very high average rates for beverages and tobacco (including alcoholic beverages), oilseeds, sugars, cocoa, tea, coffee and spices. More at least seriously elevated rates are levied on cereals and fruit and vegetables. Transportation equipment, including vehicles, incurred dues of around 28 percent on average, even though the rate for cars is higher. Clothing was still charged at almost 21 percent.