US Tariff Twist: India's Secret Spice & Tea Advantage Revealed? Major Export Boost Incoming!

Author

Abhay Singh | Whalesbook News Team

Detailed Coverage:

The United States has issued an Executive Order, effective November 13, 2023, removing specific agricultural products from the 25–50 per cent reciprocal tariffs that were imposed earlier. Products like coffee, tea, tropical fruits, fruit juices, cocoa, spices, bananas, tomatoes, beef, and some fertilizers will now only face standard Most Favored Nation (MFN) duties. According to the Global Trade Research Initiative (GTRI), this policy shift could offer India a marginal competitive advantage. However, India's current share in the US import market for these newly liberalized items is modest, standing at $548 million out of a $50.6-billion global import basket. India's primary exports in this category are high-value spices like pepper and capsicum ($181 million), ginger-turmeric-curry spices ($84 million), anise-cumin seeds ($85 million), and tea ($68 million). Notably, India has virtually no presence in large import categories like tomatoes, citrus fruits, and bananas. The GTRI analysis suggests that the exemption is driven by US needs for products not produced domestically in sufficient quantities or dependent on specific climates. A point of ambiguity remains regarding whether Indian shipments will be exempt from the full 50 per cent tariff or just the 25 per cent rate, which will ultimately determine India's price competitiveness. The think tank cautions that the broader gains from this policy change will largely accrue to exporters from Latin America, Africa, and ASEAN nations, who already dominate these product lines and possess greater scale and robust cold-chain infrastructure. Impact: This news has a minor positive impact on specific Indian agricultural export segments, particularly spices and tea, potentially improving their price competitiveness in the US market. Rating: 5/10.

Difficult terms explained: Reciprocal tariffs: Taxes imposed by one country on another country's goods in response to similar taxes imposed by that other country. MFN duties (Most Favored Nation duties): Standard tariff rates that countries agree to apply to goods imported from other countries with which they have MFN status. These are generally lower than tariffs applied to countries without MFN status. HS Code: Harmonized System Code. A standardized international system for classifying traded products. Cold-chain infrastructure: A temperature-controlled supply chain that maintains the quality of products, especially perishable goods, from production to consumption.