Tariffs pause to offer Indian businesses advantage where it directly competes with China: GTRI

In response to China's steep tariffs on American goods, the US has raised duties on Chinese imports to 125 per cent. At the same time, Trump has offered temporary relief to over 75 other trade partners, including India.

"While Chinese goods face the full brunt of the new tariffs, exporters from other countries, including India, have been given a brief reprieve," GTRI said in a note.

For the next 90 days, starting April 10, imports from India will be subject to a flat 10 per cent duty instead of the higher country-specific tariffs proposed earlier.

"This offers Indian businesses a short-term advantage--especially in sectors like textiles, leather, engineering, and electronics, where India competes directly with China," GTRI said.

"The 90-day suspension of country-specific tariffs, as outlined in the new executive order, offers a small window of opportunity for Indian exporters. While Chinese goods now face steep tariffs of up to 125 per cent, imports from India will be subject to a flat 10 per cent additional duty--significantly lower than the earlier punitive rates proposed under the April 2 order."

However, GTRI said that the benefits may be short-lived unless India proactively leverages this "breathing space" to strengthen its export ecosystem, streamline compliance processes, and enhance engagement with US buyers.

GTRI suggested that the Indian government may help by reintroducing the interest equalisation scheme to give small firms access to cheaper working capital credit and customs expedited shipments. Trump paused the reciprocal tariffs on dozens of countries that have engaged in negotiations with the US administration. However, the 125 per cent tariff levied on China will continue.

Trump's reciprocal tariff announcement last week sent tremors across asset classes globally, including here in India. Equity markets worldwide slumped, particularly after Trump's sweeping trade tariffs, which stoked fears of trade tension and an economic recession.

Since assuming office for his second term, President Trump has reiterated his stance on tariff reciprocity, emphasising that the United States will match tariffs imposed by other countries, including India, to ensure fair trade.