Sticking to his previous stance, U.S. President Donald Trump on Monday reiterated that 25% levies on imports from Mexico and Canada would go into effect on Tuesday, dashing investors’ hopes of a last-minute deal to avert the full tariffs on the two U.S. allies.
In addition to confirming that tariffs on the two U.S. neighbors would take effect on Tuesday, Trump on Monday imposed an additional 10% tariff on Chinese imports, doubling the 10% duty he had placed on Beijing in early February.
Trump had previously unveiled—and then paused—blanket tariffs on imports from major trading partners Canada and Mexico in February, accusing them of failing to stop illegal immigration and drug trafficking. The pause is set to expire on Tuesday, and the confirmation of duties has triggered a sell-off in global markets.
According to recent estimates, the duties are expected to impact over $918 billion worth of U.S. imports from both countries. Since taking office for a nonconsecutive second term, Trump has imposed a 25% duty on all U.S. imports of steel and aluminum, in addition to tariffs on Chinese imports.
He also announced that the U.S. would impose duties on pharmaceutical, semiconductor, and automobile imports. Furthermore, Trump has threatened to impose a 25% tariff on imports from the European Union.
His administration is also working on reciprocal tariffs for all countries that impose tariffs on U.S. goods or implement non-tariff barriers restricting U.S. market access, with reports suggesting an official announcement could come as soon as April 2.
Initially, U.S. markets reacted positively to Trump’s tariffs as expectations grew that they would strengthen American industries. However, markets came under pressure after impacted countries began announcing retaliatory measures, raising concerns that this would cause damage to the economy and put pressure on domestic prices.
President Donald Trump on Monday alerted America’s farmers about upcoming U.S. tariffs on imported goods, urging them to prepare to sell their products domestically.
“To the Great Farmers of the United States: Get ready to start producing a lot of agricultural goods to be sold INSIDE the United States. Tariffs will be imposed on imported products starting April 2nd. Have fun!” Trump wrote on his private social media platform amid escalating trade tensions.
According to media reports, pressure is mounting on India to lower tariffs on agricultural products, but the country is resisting, arguing that it would impact millions of poor farmers.
Amid these trade tensions, India’s Trade Minister, Piyush Goyal, began a trip to the United States on Monday to pursue trade talks, two government officials told Reuters, with weeks to go before President Donald Trump’s planned reciprocal tariffs.
During the visit, Goyal will seek clarity on U.S. reciprocal tariffs to assess their impact on India, one of the government sources told the news agency. He may also discuss potential Indian concessions, and a trade deal aimed at reducing tariffs and boosting bilateral trade.
India is open to discussing tariff cuts on industrial products, including automobiles and chemicals, but is resisting pressure to lower tariffs on agricultural products, arguing that it would impact millions of poor farmers, Reuters reported, citing the sources.
During Prime Minister Narendra Modi’s visit to the U.S. last month, both nations agreed to work on the first segment of a trade deal by the fall of 2025, aiming for bilateral trade worth $500 billion by 2030.
India had already taken steps to address key U.S. concerns, announcing plans to increase its purchases of U.S. energy resources from $15 billion to $25 billion and considering reducing tariffs in sectors such as electronics, medical equipment, and chemicals to boost U.S. exports while aligning with its domestic production initiatives.
Additionally, the Centre is reportedly planning to notify a new electric vehicle (EV) policy, which would enable international EV manufacturers like Elon Musk’s Tesla to evaluate the Indian market before committing investments, and the country is reportedly considering lowering taxes on some US goods.
If Trump is unsatisfied with India’s efforts to maintain the trade balance, he may announce tariffs on India, similar to what he did with Mexico and Canada. Analysts expect this could impact the country’s key exports, such as petrochemicals and pharmaceuticals, which account for about one-fifth of India’s exports to the U.S.
They also believe that these tariffs could further weaken Asia’s third-largest economy, adding to its growth challenges. In 2024, India was the 10th largest exporter to the world’s biggest economy. India’s bilateral goods trade surplus with the U.S. has doubled over the past decade to $35 billion in FY24, equivalent to approximately 1.0% of India’s GDP, according to recent estimates.
S&P Global Ratings recently stated that the impact of U.S. reciprocal tariffs on India will be limited, as the Indian economy is domestically driven and less reliant on exports.
Goldman Sachs outlined that the reciprocal tariff policy could impact India in three key ways: first, through country-level reciprocity; second, through product-level reciprocity; and third, through reciprocity, including non-tariff barriers.
In response to U.S. tariffs, affected countries have announced retaliatory measures. China has stated that it will impose additional tariffs of up to 15% on some U.S. goods starting March 10 and restrict exports to 15 U.S. companies. This follows Canada’s decision to impose retaliatory tariffs on an additional C$125 billion worth of U.S. imports within 21 days, beginning with a 25% levy on C$30 billion worth of goods starting Tuesday.
Economists believe that the countermeasures announced by these countries could harm the U.S. economy, as high duties on imported goods will drive up domestic prices and negatively impact exports, putting pressure on consumer spending and income levels.
U.S. consumers have already expressed concerns about a potential rise in prices, prompting them to cut back on spending. Additionally, the personal savings rate has spiked. The PCE data released last week showed that personal income rose sharply in January, increasing by 0.9% for the month—more than double the expected 0.4% increase.
However, this rise in income did not translate into higher spending, which declined by 0.2%, contrary to the forecasted 0.1% gain. The latest data on the manufacturing and construction sectors for January, released Monday, indicated modest growth.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
