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• The Trump administration's rationale centers on the idea of 'reciprocity,' arguing that existing Indian tariffs on US goods are significantly higher than those imposed by the US. Therefore, the 26% tariff is presented as a 'discounted' rate, reflecting a perceived attempt to level the playing field.

• The administration has pointed to specific examples of tariff disparities, highlighting differences in duties on automobiles, agricultural products, and other key sectors.

• The administration is also citing non tariff trade barriers, as a reason for these tariffs. They claim that India has many non tariff trade barriers that hinder US businesses.

• Sectors such as electronics, gems and jewelry, and certain textiles are expected to bear the heat of the new tariffs. This could lead to a decrease in Indian exports to the US, potentially impacting manufacturing and employment.  

• The Pharmaceutical sector, although it has been stated that some pharmaceutical products are exempt, there is still fear of trickle down effects, and future changes to what is exempt.

• The potential effects on India's IT sector, while not directly tariff-related in the traditional sense, are also a cause for concern, as broader trade tensions could affect business relationships.

• The tariffs could lead to a slowdown in India's export-driven growth, potentially affecting GDP projections.

• There are concerns about the impact on small and medium-sized enterprises (SMEs), which play a vital role in India's export sector.

• Increased trade tensions could also affect foreign investment flows into India.

The Indian government is likely to explore various options, including:

• Filing a dispute with the World Trade Organization (WTO).

• Engaging in bilateral negotiations with the US.

• Diversifying export markets to reduce reliance on the US.

• Evaluating and potentially implementing retaliatory tariffs.

• There is talk of India attempting to increase the amount of US goods that India imports, to try and balance the trade deficit.

• This move could contribute to rising protectionist sentiments globally, potentially triggering a broader trade conflict.

• It underscores the ongoing challenges to the rules-based international trading system.

• President Trump's 26% 'reciprocal tariffs' present a significant challenge to the India-US trade relationship. The coming weeks and months will be crucial in determining the long-term impact of this policy. As both nations navigate these complexities, the global trade landscape will be closely watching.