Reciprocal Tariffs
Concept and WTO Compatibility
A "reciprocal tariff" refers to matching or mirroring tariffs: Country A charges Country B the same rate that Country B charges Country A. The Trump administration framed its tariff policy as correcting perceived imbalances where the US faced higher tariffs abroad than it imposed domestically. Under WTO rules, unilateral reciprocal tariffs are generally inconsistent with the Most Favoured Nation (MFN) principle unless covered by an FTA or a recognized WTO exception.
- MFN principle (GATT Article I): Equal tariff treatment to all WTO members; prohibits discriminatory bilateral tariff arrangements outside an FTA
- GATT Article XXIV exception: Allows FTAs that cover "substantially all trade" — the India-US interim agreement must eventually conform to this standard for WTO compatibility
- India's MFN applied tariff rate: Average approximately 18% (WTO data, 2023); the US average MFN tariff is approximately 3.3%
- The India-US 18% tariff on Indian goods under the interim framework = roughly equalizing both countries' average tariff burdens
- Sensitive list: India protected dairy, rice, and millets — consistent with WTO Agriculture Agreement's special and differential treatment for developing countries
● Tracked since February 21, 2026 · last seen April 02, 2026 · updates as the daily brief publishes
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