UK and India Mull Overhaul of Levies to Avoid US Reciprocal Tariffs on April 2

TMTPOST -- Two U.S. trading partners are considering adjustments of their levies to avoid the upcoming reciprocal tariffs that are set to kick off on April 2.

Credit：China Central Television

The British government is discussing about changes of the Digital Services Tax (DST) levied on large tech companies like Meta Platforms, Inc., and Amazon.com, Inc., Chancellor of the Exchequer Rachel Reeves confirmed in an interview with BBC, suggesting the kingdom could alter the tax in exchange of exemption from new U.S. tariffs.

“We've got to get the balance right, and those discussions at the moment are ongoing. We want to make progress. We do not want to see British exporters subject to higher tariffs. I want to preserve free and open trade," said Reeves when asked about whether the United Kingdom would change the DST to save it from the Trump administration’s tariffs.

The UK introduced DST from April 1 2020 as a 2% tax on the revenues of search engines, social media services and online marketplaces which derive value from the local users. The tax now raised around £800 million a year for the UK. The potential change of DST has been significantly criticized by Liberal Democrats, who have slammed the UK government for slashing public sector jobs and disability benefits, while offering handouts in the form of tax cuts to large tech companies. Instead, the Liberal Democrats are advocating for the DST to be hiked to 6%.

The Indian government is willing to cut tariffs on more than half of American imports worth $23 billion in the initial stage of a trade agreement under negotiation, Reuters cited government sources on Tuesday. It was reported that the possible move aims to mitigate impact of the reciprocal tariffs that U.S. President Donald Trump vowed to take effect on April 2.

According to an internal assessment, the Indian government estimated these new reciprocal tariffs would affect 87% of Indian exports to the U.S. valued at $66 billion, per the aforementioned sources. These sources said India is open to lower tariffs on 55% of U.S. imports that currently are subject to duties ranging from 5% to 30%.

New Delhi reportedly wants to reach the trade deal before April 2, and other options such as adjustments of tariffs on specific industries and product-by-product negotiations are also under discussion.

Trump on Monday implied a number of countries may face watered-down reciprocal tariffs while new tariffs on different industries are on the horizon.

"I may give a lot of countries breaks,” Trump told reporters when referring reciprocal tariffs at White House ” It’s reciprocal, but we might be even nicer than that. We may take less than what they're charging because they've charged us so much, I don't think they could take it.”

Trump on Monday also suggested he will move forward tariffs on a wide range of industries on top of those on steel and aluminum. “We’ll be announcing cars very shortly,” Trump said in a Cabinet meeting, adding that levies on pharmaceuticals would be announced “at some point”. “So we’ll be announcing some of these things in the very near future, not the long future, the very near future,” Trump said.

Trump added the tariffs on lumber and semiconductor industries at an event about Hyundai’s investment later that day. Trump has described April 2 as "Liberation Day" as he touts the new tariffs on a wide range of imported goods that his administration plans to unveil on that day. When pressed on whether the tariffs on more industries will also enter effect on April 2, Trump said “not all tariffs are included that day.”

Earlier Monday, Trump posted on his social media Truth Social the U.S. government would impose a “secondary tariff” on Venezuela that will take effect on April 2. “Any Country that purchases oil and/or gas from Venezuela will be forced to pay a Tariff of 25% to the United States on any Trade they do with our Country,” Trump wrote.

Trump is weighing a two-step tariff regime on April 2: First, to use rarely invoked emergency powers to impose immediate tariffs, then to conduct investigations into trading partners, The Financial Times (FT) reported Tuesday. It is said the Trump team is exploring Section 301 investigations, the International Emergency Economic Powers Act, and Section 338 of the 1930 Tariff Act to implement tariffs of up to 50% on certain imports.

Trump on Monday indicated auto tariffs may come earlier than the reciprocal tariffs. “We’ll be announcing that fairly soon over the next few days, probably, and then April 2 comes, that’ll be reciprocal tariffs,” he said.

The FT report said Trump may slap tariffs on vehicles as early as April 2 through a previous national security study on the global auto industry.