Trump issues a fresh tariff threat to India before trade talks this week

  • Officials from the US and India are set to meet this week to break the trade impasse
  • In March, the US decided to withdraw GSP benefits to India after talks between the two broke down

Asit Ranjan Mishra
First Published9 Jul 2019
Trump has often termed India a 'tariff king' and repeatedly pointed to the 50% duty it imposes on imports of Harley-Davidson motorcycles (Photo: Bloomberg)
Trump has often termed India a ’tariff king’ and repeatedly pointed to the 50% duty it imposes on imports of Harley-Davidson motorcycles (Photo: Bloomberg)

New Delhi: Ahead of official-level trade talks between India and the US this week in New Delhi, President Donald Trump has again warned India that its high tariff regime is not acceptable to the US.

“India has long had a field day putting Tariffs on American products. No longer acceptable!” Trump tweeted on Tuesday.

India has imposed retaliatory tariffs on 28 US products, including almonds and apples, starting 5 June, a year after announcing them to counter the increase in steel and aluminium tariffs by the US and the withdrawal of duty-free benefits to Indian exporters. Following the move, the US raised the dispute at the World Trade Organization (WTO). India also raised customs duties on a host of products, including alloy steel and auto parts, in the budget presented on 5 July.

Assistant US trade representative (USTR) Chris Wilson and USTR deputy assistant Brendan Lynch are expected to meet Indian officials to break the deadlock in trade ties.

Jayant Dasgupta, India’s former ambassador to WTO, said this could be a ploy on Trump’s part to put pressure ahead of the trade talks to extract more from India. “Trump also tweeted on similar lines ahead of his talks with Modi last month. It is now following a pattern,” he added.

On 27 June, ahead of his meeting with Prime Minister Narendra Modi on the sidelines of the G20 meeting in Osaka, Trump tweeted: “I look forward to speaking with Prime Minister Modi about the fact that India, for years having put very high Tariffs against the United States, just recently increased the Tariffs even further. This is unacceptable and the Tariffs must be withdrawn!”

Briefing reporters on 5 July, external affairs ministry spokesperson Raveesh Kumar confirmed that trade was one of the key issues discussed in the Modi-Trump bilateral at Osaka. “I think it is important to understand that in any relationship, which is multidimensional like India and the US, there are bound to be certain differences, there are bound to be perspectives where we share a different approach. How we handle it is the key and flowing out of that meeting what we agreed was on all these issues w e will continue to talk,” he said.

Dasgupta said India should take the US complaints in an objective manner without compromising its larger interest. “We should try to find solutions where possible. Similarly, the US should also accommodate our market access issues with a helpful attitude,” he said.

Trump has often termed India a “tariff king” and repeatedly pointed to the 50% duty it imposes on imports of Harley-Davidson motorcycles.

Last month, commerce minister Piyush Goyal said India accepted the decision of the US to withdraw GSP benefits to its exporters “gracefully”, and would work towards making exports competitive.

In March, the US announced its decision to withdraw the preferential duty benefits to India after talks between the two sides broke down.

However, the US had deferred the withdrawal of GSP as Indian elections were underway. This had raised hopes that the two sides would re-engage to try and resolve their differences after the Modi government took charge. On 1 June, though, Trump issued the presidential proclamation and withdrew GSP benefits given to India, effective 5 June.

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