Indian Prime Minister Narendra Modi and US President Donald Trump. India-US bilateral trade rose to $115 billion in 2016, but the Trump administration wants to reduce its $31 billion deficit with India, and is pressing New Delhi to ease trade barriers.
Indian Prime Minister Narendra Modi and US President Donald Trump. India-US bilateral trade rose to $115 billion in 2016, but the Trump administration wants to reduce its $31 billion deficit with India, and is pressing New Delhi to ease trade barriers.

India defers tit-for-tat retaliatory tariffs against US goods by 45 days

Retaliatory move put on hold as two sides are trying to resolve row, says an Indian trade ministry official

New Delhi: India has decided to defer by 45 days the tit-for-tat retaliatory tariffs against 29 American products worth $235 million which were supposed to come into effect on Saturday to counter a US move to unilaterally raise import duties on Indian steel and aluminium products.

“We are extending the implementation of the retaliatory tariffs by 45 days as both sides are currently engaged in resolving the matter," an Indian trade ministry official said under condition of anonymity.

The move comes at a time when the US on Monday elevated India’s status by placing it in the Strategic Trade Authorization (STA) Tier 1 list—comparable to North Atlantic Treaty Organization (Nato) allies—that eases export of high-tech defence items to it without individual licenses.

On Wednesday, the US Congress amended an Act that will provide waiver to India and other allies from sanctions if they conduct strategic defence purchases from Russia.

India and the US will also hold the much delayed first “2+2" dialogue among their foreign and defence ministers on 6 September when US secretary of state Mike Pompeo and defence secretary James Mattis are scheduled to visit India for the talks.

India had asked the US government to exempt it from the 25% steel tariff and 10% aluminium tariff imposed by US President Donald Trump on grounds of national security. It claimed that steel and aluminium exports worth $1.2 billion to the US have been impacted after the tariff hike, with the US collecting additional tariffs worth $241 million. The US rejected India’s request after which India dragged the US to the dispute settlement mechanism in the World Trade Organization (WTO) over the matter. Other countries that have raised the issue at the WTO include China, European Union, Canada, Switzerland, Russia, Norway and Mexico.

India on 20 June notified that it will hike tariffs on 29 US products, including almonds, apples and phosphoric acid worth $10.6 billion imports in retaliation to the steel and aluminium tariff hikes by the US. India did not impose the tariffs immediately, unlike other major trading parters of the US as the two countries were engaged in bilateral negotiations to finalize a trade package to douse tensions. However, after two rounds of talks, both sides have not been able to make much headway.

Trump has often pointed to 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.

Deputy US trade representative Jeffrey Gerrish on 13 July said India’s announcement of retaliatory tariff measures against the US was “not appropriate".

The US on 16 July challenged tariff retaliation moves by China, the European Union, Canada, Mexico and Turkey at WTO. However, it avoided dragging India into the dispute at the global trade body as the country’s retaliatory tariffs have not yet come into force.

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