Trump April 2 Deadline: Liquor, Dairy, Sugar Stocks To Be Badly Hit

As the April 2 deadline set by former US President Donald Trump for reciprocal tariffs approaches, uncertainty looms over its implementation. While Washington appears to be steering toward negotiating a new trade agreement with India, concerns persist about the potential economic impact of these tariffs.

Potential Economic Impact

A recent report by Emkay estimates that if the US imposes a 10% tariff on Indian exports, India could face losses of approximately $6 billion, equivalent to 0.16% of its GDP. If the tariff rate escalates to 25%, the losses could surge to $31 billion. The report suggests that instead of sector-specific tariffs, the US is likely to implement a broad country-level tariff due to the complexities involved in targeting individual commodities.

US-India Trade Relations

Between 2021-22 and 2023-24, the US remained India’s largest trading partner, accounting for 18% of India’s total goods exports, 6.22% of imports, and 10.73% of bilateral trade. India exports goods across 30 sectors to the US, spanning agriculture and industry.

Sector-Specific Impact

If sector-specific tariffs are imposed, several Indian exports could be severely impacted. Key sectors and their estimated tariff hikes include:

• Alcohol, Wines, and Spirits: 122.10% tariff increase, affecting $19.20 million in exports.
• Dairy Products: 38.23% tariff increase on $181.49 million in trade, impacting ghee, butter, and milk powder.
• Fish, Meat, and Processed Seafood: 27.83% tariff increase on $2.58 billion in exports, affecting shrimp competitiveness.
• Live Animals and Animal Products: 27.75% tariff hike on $10.31 million in exports.
• Processed Food, Sugar, and Cocoa: 24.99% tariff increase on $1.03 billion in exports, affecting snacks and confectionery.
• Footwear: 15.56% tariff hike.
• Diamonds, Gold, and Silver: 13.32% tariff increase on $11.88 billion in exports, impacting jewelry prices.
• Industrial Goods: 10.90% tariff increase on pharmaceuticals.
• Edible Oils: 10.67% tariff increase on coconut and mustard oil.

However, key sectors such as ores, minerals, petroleum, and garments are expected to remain unaffected by the new tariffs.

India’s Counter-Offer

To mitigate the impact of these tariffs, India has proposed reducing duties on various US imports, particularly agricultural products. As part of ongoing negotiations, India has suggested tariff cuts on items such as almonds, cranberries, and bourbon whiskey—key US exports.

According to a Reuters report, India is willing to offer tariff reductions on more than half of the $23 billion worth of US imports, marking a substantial concession. The Indian government’s internal assessment indicates that 87% of India’s $66 billion exports to the US could be affected by reciprocal tariffs. To minimize trade disruptions, India’s counter-offer could include lowering or eliminating tariffs on select US goods.

While trade negotiations continue, the looming deadline and potential tariff hikes create significant uncertainty for Indian exporters. A broad-based tariff approach by the US could severely impact India’s export revenue, making the outcome of these negotiations crucial for maintaining stable trade relations between the two nations.