Delhi yet again defers levying retaliatory tariffs on US products valued at $235 mn

New Delhi: India on Monday yet again deferred enforcing retaliatory tariffs by 45 days against 29 US products worth $235 million. The higher tariffs to counter the US move to unilaterally raise import duties on Indian steel and aluminium products were supposed to come into effect from Monday.

Though both sides have constructively engaged to finalize a trade package, disproportionate demands by the US government have delayed attempts to finalize the deal, a commerce ministry official said speaking on condition of anonymity.

India on 20 June notified that it will raise tariffs on 29 US products, including almonds, apples and phosphoric acid worth $10.6 billion in imports in retaliation at the steel and aluminium tariff hikes by the US. But India did not impose the tariffs immediately, unlike other major trading partners of the US, as the two countries were engaged in bilateral negotiations to finalize a trade package to douse tensions. The duty hikes were then to come into effect on 4 August, but India has since continued to push back the decision.

On the trade front, both sides continue to blow hot and cold. India is negotiating a trade package with the US and has been demanding a waiver on tariff hikes similar to the ones the US granted to Argentina, Brazil and South Korea. US President Donald Trump, who has accused India of practising unfair trade, has said he wants to end subsidies to countries such as India and China.

Mint reported on 10 September that India has turned down a Trump administration offer to waive tariff hikes on steel and aluminium in exchange for India capping exports of these items at 70% of its total exports to the US last year. India’s exports of steel items to the US fell 42% in the June quarter, affected by sanctions slapped by the Trump administration on grounds of national security, even as exports of aluminium items to the US, facing similar sanctions, jumped 59%, Mint reported on 3 September.

India has taken the view, like many other countries, that the US sanctions are safeguard measures, although they are in the name of national security. It has claimed that steel and aluminium exports worth $1.2 billion to the US have been hit post the tariff hike, with the US collecting additional tariffs of $241 million.

After the US rejected India’s request for an immediate waiver, India dragged it to the World Trade Organization (WTO). Other countries and groupings that raised the issue at WTO include China, the European Union, Canada, Switzerland, Russia, Norway and Mexico.

The US Trade Representative is reviewing the generalized system of preferences (GSP) eligibility of India, after the US dairy and medical device industries requested a review of the benefits, alleging Indian trade barriers in these sectors. The GSP programme allows duty-free entry of 1,937 products worth $5.6 billion from India into the US, benefiting exporters of textiles, engineering, gems and jewellery, and chemicals. The US has been trying to leverage the GSP review to gain more market access in India.