Asian Peers Get Lower Tariffs; Pharma, Energy Brought Under Tariffs From Aug 7

Chennai: Intensifying competition for India, the US made overnight changes to the tariffs of some of the Asian peers, bringing their rates lower to 19 or 20 per cent against India’s 25 per cent. The US also has brought pharmaceuticals and energy products under the tariff regime.

The list of countries which managed to get better tariffs than India include Bangladesh, Cambodia, Malaysia, Pakistan, Sri Lanka, Taiwan and Thailand. Bangladesh’s tariffs have come down from 37 per cent to 20 per cent, Cambodia 49 per cent to 19 per cent, Malaysia, 24 per cent to 19 per cent, Pakistan 29 per cent to 19 per cent, Sri Lanka 44 per cent to 20 per cent, Taiwan 32 per cent to 20 per cent and Thailand 36 per cent to 19 per cent.

“Some trading partners have agreed to, or are on the verge of agreeing to, meaningful trade and security commitments with the United States, thus signalling their sincere intentions to permanently remedy the trade barriers,” US President’s executive order said.

The new tariffs of our competitors are going to drive away India’s competitiveness in terms of pricing, said K Unnikrishnan, director general of FIEO. The US executive order also has taken away the exemption given to pharmaceutical products and energy products earlier, he added.

The products that are exempted from tariffs are humanitarian relief goods like food and medicines; informational goods like publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks; all products with US raw material content of at least 20 per cent of the customs value; and electronic parts and devices typically associated with semiconductors, processors, integrated circuits, computer-related hardware, and certain electronic assemblies.

In the case of 20 per cent US content in any product, the tariff will be levied on only the non-US content. “For apparels and home textile exports to the US, India can lower its duty and increase usage of long, extra-long and medium staple cotton from the US and bring down the total tariffs,” said Sanjay Jain, Chair of ICC National Textiles Committee.

For steel and aluminium, the tariffs are 50 per cent and for derivative products, the steel or aluminium content will be charged at 50 per cent for every country. Automobiles and auto components will be charged 25 per cent for all.

The trading partners of the US will have to pay their respective tariffs along with the existent Most-Favoured Nation tariffs. Japan and South Korea will not pay MFN tariffs as they already have zero duties from the earlier FTAs.

The new tariffs will be effective for all goods loaded onto a vessel from August 7. Those shipped before August 7, will be exempted from the new rates if they enter the US before October 5.

China’s tariffs will remain at 30 per cent till the 90-day period for the truce ends on August 12. The European Union has certain added benefits. It will have to pay a 15 per cent tariff if Most-Favoured Nation tariffs are lower and if higher, MFN rates alone have to be paid.