Tariff reciprocity was always a terrible idea. India, home to 607 million workers making around $550 per month in mid-level manufacturing jobs, would happily replace American steel workers and high-paid pharmaceutical lab workers in a zero-for-zero trade deal. A top paid laboratory technician in India makes about $35,000 a year. That’s a small fortune in India.
The U.S. is mainly reliant on India for generic drugs today. Their labs lead in FDA recalls and are often subject to Warning Letters and import bans, which are rare largely due to the fact that the FDA does not want to risk supply.
The U.S. must not sacrifice the chance to rebuild industrial capacity in exchange for another empty trade promise to import more American goods, as if these promises will actually materialize.
On Monday, Bloomberg reported that India made the proposal during a delegation visit to Capitol Hill in April. The alleged offer is for no tariffs on imported American steel, auto parts and pharmaceuticals; each are goods that Indian labor makes and would unlikely want to lose out to American imports.
If they were to agree to such things, the dollar value of those items would mean that only niche items India can’t buy anywhere else would make it into their country. One hundred Indian rupees currently will buy you around $1.20 worth of American goods. In this scenario, one metric ton of U.S. hot rolled steel costs about $900 per metric ton. Tata Steel can price hot rolled steel made at its steel mill in Jamshedpur for $600 per metric ton.
Tariff reciprocity was meant to get countries to lower non-tariff barriers, and perhaps, open markets to some goods like our agriculture—a favorite export item for U.S. Senators and House Representatives. This never meant that if a country lowered their tariffs, we would in turn lower ours. That would amount to a de facto free trade deal, or at least close to it. The Congress would want to participate in that negotiation process, as is the norm for any such free trade agreements.
If Bloomberg’s reporting is correct, India’s offer is a total non-starter.
India’s Zero-for-Zero Targets National Security Tariffs
Every item mentioned in the Bloomberg report is subject to global Section 232 tariffs. These tariffs are for national security and should not be up for negotiation in any trade deal.
A study published recently in the journal “Production and Operations Management” said that patients taking generic drugs made in India were more likely (up to 54.3%) to suffer serious adverse health effects than patients taking the same drugs made in more advanced economies such as the U.S. or Europe. They said that this was because of lab quality, not drug ingredients.
President Trump calls America’s perennial short supply of critical drugs and essential generics a national emergency. For this reason, he ordered a Section 232 investigation into American pharmaceutical imports in April. Pfizer CEO Albert Bourla said he agreed with Trump. “I think it’s legitimate,” Bourla said about the national security nature of pharmaceutical drug safety and supply during an earnings call in April. “I think no country wants to have critical medicines produced outside of the country,” Bourla said.
Going below the 232 tariff rate of 25% on a promise that India will import branded drugs and steel rebar, for example, brings us back to the original reason why the steel and aluminum tariffs failed in the first place. Many steel producing countries were left exempt, leading to floods of imports from Mexico and across Europe. India was not exempt.
Steel and automotive are both now subject to global Section 232 tariffs, with Mexico and Canada automotive being the only exempted countries for automotive (providing the vehicle and its core parts are made with 75% USMCA components). Mexico and Canada are not exempt from steel tariffs despite our free trade agreement. Going zero-to-zero reciprocity with India on Section 232 items simply opens up a can of worms. Mexico and Canada will of course want the same deal. It adds another level of complexity to the already highly-complex nature of rewriting the global trade order. President Trump should not offer any exemptions on Section 232 tariffed goods in subsequent trade talks. Trade negotiators should make that clear.
Volumes of U.S. steel exports to India are negligible—effectively zero in 2018, 2019, 2023 and 2024, reflecting minimal quantities and values of hot and cold rolled steel. Exported values are under $2 million in those years.
U.S. pharmaceutical exports to India do exist, but we exported around $635 million in 2024, down from a record high of $877 million in 2023. And, in that time we imported around $10 billion of generic drugs from India global pharmaceutical giants like Glenmark, Cipla, Dr. Reddy, and Aurobindo, to name a few. (Aurobindo gets a lot of its key starting materials from Chinese state-owned enterprises, including those that are sanctioned. CPA did a study on this practice in February 2024). Recent economic figures showed that pharmaceutical imports from India, Ireland and the EU amounted to a $41 billion deficit in March.
Thankfully, it looks like the President may be leaning on rejecting India’s offer anyway. “We don’t care about their markets,” Trump said in the Oval Office on Tuesday.
“We could sign 25 deals right now, if we wanted,” Trump said at the White House alongside new Canadian Prime Minister Mark Carney. “We don’t have to sign deals. They have to sign deals with us. They want a piece of our market. We don’t want a piece of their market.”
He was not addressing any particular country. Instead he was sticking to his earlier comments that the U.S. is the prime market, and remains the market that everyone wants to enter into. Everyone sells into this market, and the simple fact is that there is going to be a premium for entry. Those who do not want to pay a premium for entry can manufacture in the U.S., or at the very least, in Mexico where the USMCA is still alive, for the time being.
For foreign countries looking to “make a deal,” a word to the wise: zero-for-zero on Section 232 items will get you nowhere.
Exports are not the Avenue for Prosperity
U.S. exports in 2024 were only 11% of GDP. Meanwhile, domestic U.S. consumption was nearly 70% in 2024. The domestic market is the key economic foundation, especially for domestic companies. The President knows this, and this is why he wants to drive more producers to produce for the local market. Opening the market to more Indian steel, cars, car parts—and now pharmaceuticals—would put a big hole in Trump’s protective tariff policy.
If India gets that alleged ask, and it is unlikely that they will on those items, others will want to secure equal treatment from the U.S. If exempting tariffs on Section 232 items became a trend in these reciprocity deals, Bloomberg may gloat, but the stated goals of using tariffs for reindustrialization and investment will be doomed.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
India’s Zero-for-Zero Reciprocal Tariff Offer Must be a Non-Starter
Tariff reciprocity was always a terrible idea. India, home to 607 million workers making around $550 per month in mid-level manufacturing jobs, would happily replace American steel workers and high-paid pharmaceutical lab workers in a zero-for-zero trade deal. A top paid laboratory technician in India makes about $35,000 a year. That’s a small fortune in India.
The U.S. is mainly reliant on India for generic drugs today. Their labs lead in FDA recalls and are often subject to Warning Letters and import bans, which are rare largely due to the fact that the FDA does not want to risk supply.
The U.S. must not sacrifice the chance to rebuild industrial capacity in exchange for another empty trade promise to import more American goods, as if these promises will actually materialize.
On Monday, Bloomberg reported that India made the proposal during a delegation visit to Capitol Hill in April. The alleged offer is for no tariffs on imported American steel, auto parts and pharmaceuticals; each are goods that Indian labor makes and would unlikely want to lose out to American imports.
If they were to agree to such things, the dollar value of those items would mean that only niche items India can’t buy anywhere else would make it into their country. One hundred Indian rupees currently will buy you around $1.20 worth of American goods. In this scenario, one metric ton of U.S. hot rolled steel costs about $900 per metric ton. Tata Steel can price hot rolled steel made at its steel mill in Jamshedpur for $600 per metric ton.
Tariff reciprocity was meant to get countries to lower non-tariff barriers, and perhaps, open markets to some goods like our agriculture—a favorite export item for U.S. Senators and House Representatives. This never meant that if a country lowered their tariffs, we would in turn lower ours. That would amount to a de facto free trade deal, or at least close to it. The Congress would want to participate in that negotiation process, as is the norm for any such free trade agreements.
If Bloomberg’s reporting is correct, India’s offer is a total non-starter.
India’s Zero-for-Zero Targets National Security Tariffs
Every item mentioned in the Bloomberg report is subject to global Section 232 tariffs. These tariffs are for national security and should not be up for negotiation in any trade deal.
Today, pharmaceuticals are exempt from tariffs, but are subject to a Section 232 investigation. India is a prime source of generic drugs. Their labs are also a prime source of recalls and drugs-gone-bad, so much so that the Food and Drug Administration (FDA) said on Monday that it will finally inspect Indian labs without advanced notice of their arrival.
A study published recently in the journal “Production and Operations Management” said that patients taking generic drugs made in India were more likely (up to 54.3%) to suffer serious adverse health effects than patients taking the same drugs made in more advanced economies such as the U.S. or Europe. They said that this was because of lab quality, not drug ingredients.
Going below the 232 tariff rate of 25% on a promise that India will import branded drugs and steel rebar, for example, brings us back to the original reason why the steel and aluminum tariffs failed in the first place. Many steel producing countries were left exempt, leading to floods of imports from Mexico and across Europe. India was not exempt.
Steel and automotive are both now subject to global Section 232 tariffs, with Mexico and Canada automotive being the only exempted countries for automotive (providing the vehicle and its core parts are made with 75% USMCA components). Mexico and Canada are not exempt from steel tariffs despite our free trade agreement. Going zero-to-zero reciprocity with India on Section 232 items simply opens up a can of worms. Mexico and Canada will of course want the same deal. It adds another level of complexity to the already highly-complex nature of rewriting the global trade order. President Trump should not offer any exemptions on Section 232 tariffed goods in subsequent trade talks. Trade negotiators should make that clear.
Why the U.S. Needs President Trump’s Tariffs
Read More »Volumes of U.S. steel exports to India are negligible—effectively zero in 2018, 2019, 2023 and 2024, reflecting minimal quantities and values of hot and cold rolled steel. Exported values are under $2 million in those years.
U.S. pharmaceutical exports to India do exist, but we exported around $635 million in 2024, down from a record high of $877 million in 2023. And, in that time we imported around $10 billion of generic drugs from India global pharmaceutical giants like Glenmark, Cipla, Dr. Reddy, and Aurobindo, to name a few. (Aurobindo gets a lot of its key starting materials from Chinese state-owned enterprises, including those that are sanctioned. CPA did a study on this practice in February 2024). Recent economic figures showed that pharmaceutical imports from India, Ireland and the EU amounted to a $41 billion deficit in March.
Thankfully, it looks like the President may be leaning on rejecting India’s offer anyway. “We don’t care about their markets,” Trump said in the Oval Office on Tuesday.
“We could sign 25 deals right now, if we wanted,” Trump said at the White House alongside new Canadian Prime Minister Mark Carney. “We don’t have to sign deals. They have to sign deals with us. They want a piece of our market. We don’t want a piece of their market.”
He was not addressing any particular country. Instead he was sticking to his earlier comments that the U.S. is the prime market, and remains the market that everyone wants to enter into. Everyone sells into this market, and the simple fact is that there is going to be a premium for entry. Those who do not want to pay a premium for entry can manufacture in the U.S., or at the very least, in Mexico where the USMCA is still alive, for the time being.
For foreign countries looking to “make a deal,” a word to the wise: zero-for-zero on Section 232 items will get you nowhere.
Exports are not the Avenue for Prosperity
U.S. exports in 2024 were only 11% of GDP. Meanwhile, domestic U.S. consumption was nearly 70% in 2024. The domestic market is the key economic foundation, especially for domestic companies. The President knows this, and this is why he wants to drive more producers to produce for the local market. Opening the market to more Indian steel, cars, car parts—and now pharmaceuticals—would put a big hole in Trump’s protective tariff policy.
If India gets that alleged ask, and it is unlikely that they will on those items, others will want to secure equal treatment from the U.S. If exempting tariffs on Section 232 items became a trend in these reciprocity deals, Bloomberg may gloat, but the stated goals of using tariffs for reindustrialization and investment will be doomed.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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