Is India really the ‘Tariff King’? Not really, says a new report

Is India really a “very big abuser” of trade ties with the US and levies high import tariffs on products from there? A new report by economic think tank Global Trade Research Initiative (GTRI) says this is incorrect, pointing out that several countries impose high tariffs on various products to protect their domestic industry.

“While India needs serious tariff reforms, the label of ‘Tariff King’ does not hold up when compared to the tariff practices of the USA and other major economies,” said the report, which has analysed import duties levied by India and the US. It has suggested that the US should consider signing a free trade agreement with India if it is keen on zero tariffs but has noted that the US has had a cautious approach even in the Indo-Pacific Economic Framework, where no tariff cuts were included.

“India has already removed tariffs on most imports from its FTA partners like ASEAN, Japan, and South Korea, showing its openness to free trade. However, despite India's willingness, the U.S. has been reluctant to reduce tariffs through FTAs,” said the report by Ajay Srivastava, Founder, GTRI.

Former US President and Republican Presidential nominee Donald Trump had recently called India "an abuser" of import tariffs, a claim that echoed his October 2020 statement labelling India the ‘Tariff King’.

The report conceded that while it is true that India imposes high duties on select products, it said that Trump’s argument overlooks essential context, making his accusations unfair. “Trump does not talk about average tariffs but singles out products with the highest tariffs charged by India,” it said.

For instance, Trump had on January 24, 2019 said that India charges a 150% import tariff on US whiskey. The report pointed out that while India does impose high duties on many items, including a 150% duty on whiskey and wines and 100%- 125% duty on automobiles, it is not the only country to do so.

“Many nations protect domestic industries by imposing significant tariffs on certain items. World tariff profiles 2023 published by the WTO lists the data on the highest tariff charged by countries,” it pointed out. Japan may like to protect its rice farmers, the US its tobacco farmers and India its growing wine industry.

The highest tariffs of some other countries include 457% by Japan, 887% by Korea and 350% by the US.

Yet, high tariff items do not represent the tariffs at which actual trade happens for most items, it further said. “The real issue lies in Trump’s focus on individual high tariffs rather than average or trade-weighted tariffs, which offer a more accurate representation of a country’s trade policy,” it said, pointing out that while India’s average tariff rate of 17% is higher than the U.S.’s 3.3%, it is comparable to other major economies like South Korea (13.4%) and China (7.5%).