US reciprocal tariffs: Decoding the impact
Updates and insights on recent developments regarding U.S. reciprocal tariffs and their potential implications for India’s trade landscape.
As part of a new set of measures, the U.S. government has invoked emergency powers through Executive Orders signed by President Trump on 2 April 2025. These orders introduce a blanket 10% additional tariff on all imports, effective from 5 April 2025, with escalated tariffs of 26% targeting imports from India, effective 9 April 2025.
This analysis highlights key sectors that could be impacted and explores strategic avenues for India to address these new tariffs, such as leveraging bilateral trade discussions and conducting detailed tariff impact assessments to navigate these changes.
Mahesh Jaising
Gulzar Didwania
Mahesh Jaising
Mahesh is a Partner and National Indirect Tax Leader of the Indirect Tax Group at Deloitte and is based out of the Bengaluru office. He has over 24 years of experience in a wide range of indirect tax matters, with a particular focus on the IT, e-commerce, real estate and education sectors. Mahesh has extensive experience in advising clients on the tax implications and risks involved in the establishment of manufacturing and distribution networks and services operations. He has also advised companies in restructuring with respect to their manufacturing and services activities, including the establishment of SEZ units and availing of host of indirect tax benefits. In his advisory role, Mahesh has his clients on complex issues including cross-border service tax & VAT and on tax issues pertaining to software transactions. Mahesh has assisted large MNCs on implementation of goods and services tax in India and continues to advise clients in all spheres of indirect taxes in India. Mahesh has also appeared before the tax authorities on various complex high-value service tax, VAT and GST litigation matters. He is deeply engaged in representations before policymakers and regulatory authorities through various industry chambers. Mahesh is ranked amongst leading indirect tax advisors in ITR's Indirect Tax Leaders Guide. Mahesh is a graduate in Commerce from the University of Bangalore and qualified as a Chartered Accountant.
Mahesh Jaising
Mahesh is a Partner and National Indirect Tax Leader of the Indirect Tax Group at Deloitte and is based out of the Bengaluru office. He has over 24 years of experience in a wide range of indirect tax matters, with a particular focus on the IT, e-commerce, real estate and education sectors. Mahesh has extensive experience in advising clients on the tax implications and risks involved in the establishment of manufacturing and distribution networks and services operations. He has also advised companies in restructuring with respect to their manufacturing and services activities, including the establishment of SEZ units and availing of host of indirect tax benefits. In his advisory role, Mahesh has his clients on complex issues including cross-border service tax & VAT and on tax issues pertaining to software transactions. Mahesh has assisted large MNCs on implementation of goods and services tax in India and continues to advise clients in all spheres of indirect taxes in India. Mahesh has also appeared before the tax authorities on various complex high-value service tax, VAT and GST litigation matters. He is deeply engaged in representations before policymakers and regulatory authorities through various industry chambers. Mahesh is ranked amongst leading indirect tax advisors in ITR's Indirect Tax Leaders Guide. Mahesh is a graduate in Commerce from the University of Bangalore and qualified as a Chartered Accountant.
Policy recommendations and the way forward
- Use the proposed bilateral trade agreement discussions and the options provided under the executive order: India can use existing institutional platforms to address the issue at a strategic level. India is expected to push for a faster conclusion of the proposed bilateral trade agreement, using the tariff escalation as both a point of negotiation and a trigger for broader structural dialogue. Tariff alignment, digital trade facilitation and mutual recognition of standards could form the bedrock of this re-engagement. Furthermore, India can explore the provisions under the executive order such as tariff modifications based on cooperative steps as an option to engage with the US authorities.
- Tariff impact assessment studies: Sectors can undertake a detailed tariff impact assessment to gain a thorough understanding of their supply chain, trade flows and contractual obligations in relation to increased tariff payments. It is essential to have clear and accurate import and export transaction data, along with visualised trade flow maps that include values, applicable duties by product category, manufacturers and countries of origin. and accurate import and export transaction data, along with visualized trade flow maps that include values, applicable duties by product category, manufacturers, and countries of origin.
- Assess comparative advantage: Since many countries have been struck with an even higher reciprocal tariff, apparel being an example, there might be an opportunity for certain businesses to relook at their existing manufacturing footprints.
