Even as it geared up to announce reciprocal tariffs, the Donald Trump administration has fired fresh salvos at India’s import curbs, denting hopes of any reprieve for New Delhi from the much-touted additional trade barriers.
On Monday, White House Press Secretary Karoline Leavitt made sharply critical comments about India, European Union and Japan for their “unfair trade practices.” These countries are among America’s major trading partners, but were not listed among China, Canada and Mexico, countries which faced additional US tariffs after Trump assumed office.
Separately, in a report, the United States Trade Representative (USTR) made extensive adverse comments on India’s assorted economic policies like Make-in-India, defence offset requirements, data localisation norms, import licensing, and and patenting rules.
“…You have a 100% tariff from India on American agricultural products,” Leavitt told reporters. Clubbing India with European Union and Japan, she said, “these countries have been ripping off our nation for far too long, and they’ve made, I think, their disdain for the American workers quite clear.” Leavitt added that allegedly high tariffs “make it virtually impossible for US products to be imported into these markets.”
The comments came despite the fact that India’s average agriculture tariff, even after an escalation seen in recent years, is 39% at present, with the trade weighted rate being 65%. Of course, India levies 100% tariffs on walnuts and 150% on alcoholic beverages, but most other items of export interest to the US attract much lower tariffs in India.
While New Delhi has recently rolled out sweeping cuts to duties on American goods ranging from textiles to motorcycles, the US had asked India to make greater concessions across sectors, including farming.
A USTR report on foreign trade barriers underscored India’s high levies structure, including 39% tariffs on agricultural products, eight times what the US charges. The country maintains high applied tariffs on a wide range of goods, including vegetable oils, apples, corn, coffee, raisins and walnuts, it said, using data from 2023.
In fact, the National Trade Estimate (NTE) report by the USTR singled out India for having “highest applied tariffs” by a major world economy with an average applied tariff rate of 13.5 % for non-agricultural goods and 39% for agricultural goods.
The preference for Made in India products in government procurement has also been criticised. The report is also critical of formal and informal policies regarding electronic payment services like market share limitation of 30% that favour local players, compliance requirements of internet based service providers, particularly those that operate social media, messaging, and news and entertainment content in India.
Internet shutdowns, defence offset policy that requires local investments by companies winning contracts are other issues pointed out by the USTR as the ones that hamper US business. Digital Personal Data Protection Act (DPDPA), data privacy regime in India and data localisation norms have also come under flak.
The NTE report is an annual publication that details foreign trade barriers faced by US exporters and USTR’s efforts to reduce those barriers. In most years the report may go unnoticed but with worldwide reciprocal tariffs by US just hours away it offers hints on the imminent reciprocal tariffs.
The USTR report lists a large number of non tariff barriers faced by the US farm sector while exporting to India like the opaque and unpredictable nature of India’s application of quantitative restrictions on imports of pulses – sometimes the restrictions are completely eased, sometimes they are imposed selectively. The report says that it has affected the ability of US exporters to access the market.
Another area of concern flagged by the report is the import licensing. It has listed certain livestock products, pharmaceuticals, certain chemicals and information technology products. It also flagged items that are importable only by government trading monopolies and are subject to Cabinet approval regarding import timing, and quantity like corn under a tariff-rate quota.
On import licensing for IT products like laptops, tablets and some servers which was introduced in 2023 but its implementation delayed till end of this year, the USTR said, “US exporters have expressed concerns over the lack of prior stakeholder consultations. The United States continues to monitor the situation and engage with India on these concerns.”
The report has also raised concerns about how the import duty changes are announced without an opportunity for comment. The US has also criticised India’s strict import licensing for manufactured goods and medical devices. In 2024, India stopped issuing licenses for refurbished U.S. medical devices, affecting exports.
Also under attack in the USTR report are restrictions on genetically modified food, quality control orders, mandatory local testing of telecom equipment, restrictions on Foreign Direct Investment (FDI) in retail – online and physical, insurance and banking.
The US has a lot of areas to choose to justify any amount of reciprocal tariffs that it might impose. With both countries already negotiating Bilateral Trade Agreement (BTA) some scope might be left for talks to continue.
Apart from India, the USTR report covers 58 countries, including Australia, Bangladesh, Canada, Chile, China, the EU, India, Japan, Mexico, South Korea, Taiwan, and the United Kingdom.
In addition to import duties, the reciprocal tariff plan will also examine the non-tariff barriers that US businesses face in exporting to other countries and level those too with duties.