Quicksplained: 26% or 27%? Why US keeps changing India's tariff rate

Is India facing a 26 per cent or 27 per cent tariff?

There seems to be some confusion surrounding the tariff the US has imposed on India.

US President Donald Trump had announced a slew of tariffs on dozens of countries across the world – on what he described as ‘Liberation Day.’

“Taxpayers have been ripped off for more than 50 years,” Trump said from the Rose Garden of the White House. “But it is not going to happen anymore.”

The base tariffs go into effect on April 5 and the higher reciprocal rates on April 9.

But what happened? What do we know? Why the confusion?

• At his press conference in the White House’s Rose Garden on April 2, Trump announced that there would be a 26 per cent tariff on India.

• Trump, calling Prime Minister Narendra Modi “a great friend,” said “he hasn’t been treating us right.” He said India would be getting a ‘discounted tariff’ of 26 per cent.

• Trump carried with him a helpful chart outlining the different tariffs countries would face.

• However, according to the figures in the White House annex, India was to be charged a tariff of 27 per cent.

• As per Bloomberg, India was among the 14 countries whose tariff rates were one per cent higher than was put up during Trump’s speech in the Rose Garden.

• However, the White House on Thursday later revised the figures given in the official documents to match up with the figures originally shown on Trump’s chart.

• The rates for South Korea, Botswana, Cameroon, Malawi, Nicaragua, Norway, Pakistan, the Philippines, Serbia, South Africa, Thailand, Vanuatu, and the Falkland Islands were also revised by one percentage point downwards. A White House official has confirmed that the rates listed in the revised annex are final.

• Indian officials called the reciprocal tariffs a ‘mixed bag’ and not a setback for India.

• The Commerce and Trade Ministry said on Thursday, “Keeping in view the vision of Viksit Bharat, the Department is engaged with all stakeholders, including Indian industry and exporters, taking feedback of their assessment of the tariffs and assessing the situation. The Department is also studying the opportunities that may arise due to this new development in the US trade policy.”

• Trump has claimed that the tariffs are “reciprocal” and that the levies  were a response to duties and other non-tariff barriers put on US goods.

• The Trump administration has declared an “economic emergency” to bypass Congress and impose a 10 per cent tariff on nearly all countries and territories. It has set even higher levies for about 60 nations that it says are the “worst” offenders.

• To determine how much higher those nations’ rates should be, the White House says it calculated the size of each country’s trade imbalance on goods with the United States and divided that by how much America imports from that nation.

• It then took half that percentage and made it the new tariff rate.

With inputs from agencies