New Delhi, Feb 3. In a decisive move likely to reshape global trade dynamics, U.S. President Donald Trump has imposed hefty tariffs on imports from Canada, Mexico, and China, citing concerns over illegal immigration and drug trafficking. Effective February 4, 2025, Canadian and Mexican goods will face a 25% tariff, while Chinese imports will be subject to a 10% tariff. Canadian energy products, however, will be taxed at a reduced 10% rate.
The affected nations have responded swiftly. Canada has announced retaliatory tariffs on $155 billion worth of U.S. goods, while Mexico signaled plans to implement similar countermeasures. China, too, has vowed corresponding actions, raising concerns of an escalating trade standoff.
Renowned global investor Mark Mobius, who manages the Mobius EM Opportunities Fund, highlighted the broader consequences of these measures, warning of their potential to disrupt global markets. He underscored India’s strategic opportunity to minimize the adverse effects by deepening its trade ties with the U.S., which could promote a more open and balanced global trade order.
India appears ready to seize this moment. Finance Minister Nirmala Sitharaman, in her Union Budget 2025-26, announced a series of strategic customs duty reforms aimed at boosting domestic production and reducing dependence on imports. The budget proposes eliminating customs duties on 36 life-saving drugs and medicines, including treatments for cancer and rare diseases, making critical healthcare more affordable.
To enhance domestic manufacturing, particularly in key sectors such as electric vehicles and mobile phones, the budget exempts certain capital goods used in lithium-ion battery production from basic customs duty.
The budget also addresses luxury and automotive imports. Duties on imported motorcycles with engine capacities over 1,600cc have been reduced from 50% to 30%, while smaller bikes will face a 40% duty, down from 50%. For fully imported cars priced above $40,000, the headline customs duty has been cut from 125% to 70%, but a newly introduced 40% agriculture cess keeps the cumulative tax at 110%.
These policy changes reflect India’s drive to bolster its economic resilience, promote domestic industry, and position itself as a global manufacturing hub, all while navigating a shifting and uncertain international trade environment.
( With inputs of IANS )