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Business News/ Politics / Policy/  Motorcycles matter as trade tensions rise
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Motorcycles matter as trade tensions rise

India has announced that it will impose retaliatory tariffs worth $235 million on 29 items imported from the US from 4 August

US President Donald Trump has often raised the issue of higher tariffs imposed by India on Harley-Davidson motorcycles and has threatened to slap reciprocal taxes on Indian bikes.Premium
US President Donald Trump has often raised the issue of higher tariffs imposed by India on Harley-Davidson motorcycles and has threatened to slap reciprocal taxes on Indian bikes.

A healthier US economy has given US President Donald Trump the confidence to launch an all-out trade war with its major trading partners. With India in the spotlight as well, matters have come to a head. Mint looks at what’s at stake.

What’s this Indo-US trade war all about?

As part of his ’America First’ promise, US President Donald Trump has taken a tough stand on trade. He has hiked tariffs on steel and aluminum by 25% and 10%, respectively. Though India’s steel and aluminum exports to the US are not as high as those of Canada, Mexico or China, the tariff hikes apply to it as well. India has now announced that it will impose retaliatory tariffs worth $235 million on 29 items imported from the US from 4 August. India has also dragged the US to the WTO’s dispute settlement mechanism.

Hasn’t the US targeted India on trade before?

Yes. Trump has often pointed at the bilateral trade surplus India enjoys, claiming that it prohibits US exports through higher tariffs. He has often raised the issue of higher tariffs imposed by India on Harley-Davidson motorcycles and has threatened to slap reciprocal taxes on Indian bikes. The US has challenged almost all of India’s export subsidies at WTO. It is also reviewing the generalized system of preferences programme under which India exports goods worth $5.6 billion to the US at preferential rates.

Have Indo-US trade relations worsened after Trump took over?

Yes. That said, trade terms between the two countries have been tense even when the bilateral relationship was at an all-time high. During Barack Obama’s tenure, the US dragged India to the WTO over its ban on US poultry imports and its subsidy programme for domestic solar panel manufacturers. India lost both cases. India has taken the US to the WTO over allegations of trade-restrictive measures.

What’s next?

During trade minister Suresh Prabhu’s visit to the US earlier this month, the two countries decided to negotiate a trade package. India expects the package to include a deal on steel and aluminum tariff hikes by the US and a commitment to continue GSP benefits. The US wants greater market access for dairy products, medical devices and Trump’s favourite Harley Davidson. US official Mark Linscott may visit India next week to begin talks.

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Published: 21 Jun 2018, 11:26 PM IST
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