Tariff pe Tariff: When Trump slapped taxes on India
Photo: AFP

Ahead of his state visit to India, President Donald Trump has been all praise when it comes to his counterpart, Narendra Modi. Speaking at a Colorado rally recently, Trump told thousands of his supporters that he "really likes" Prime Minister Modi and they would be talking business.

"We've got to talk a little...We've got to talk a little business. It's been hitting us hard. They give us tariffs, one the highest in the world is India," he said.

The President however lamented that India has been hitting the US "very hard" on trade with high tariffs for many years. While remaining non-committal about the expectation of a trade deal with India during his visit, Trump added that "great new trade deals will likely be done".

However, putting aside the prospect of a trade deal, let us also take a look at the times when it has not quite been smooth sailing. To this end, we decided to put together a list highlighting the taxes Trump has slapped on India.

Soon after taking over, the Trump administration had put in place tariffs on steel and aluminium imports from other countries. According to Pravin Krishna, a professor of international economics and business at Johns Hopkins University, this translated to a 25% tarriff on US imports of steel from India, or $700 million. Sanctions on aluminium imports amounted to about $350-400 million. Being above what had been previously negotiated by the US, this was viewed by many as being aggressive.

Later, in May 2019, Trump scrapped trade privileges allotted to Indian exporters under the Generalized System of Preferences (GSP) programme. This came into effect on June 5. India was the largest beneficiary of the GSP programme in 2017 with USD 5.7 billion in imports to the US given duty-free status, TPCI Chairman Mohit Singla had earlier said in a statement.

The Generalized System of Preferences is a preferential tariff system which allows various counties to export tariff-free in US markets. This system was designed by the US government in order to support developing countries to grow their trade and make their prime trade sectors stronger.

"Even the US was benefiting from the GSP regime, since the intermediary inputs provided by India helped keep its industry competitive. This withdrawal of GSP is only going to inject the estimated additional burden of USD 190 million, which is minuscule compared to India's overall export to US," he had said at the time.

The decades old GSP, introduced in 1976 saw as many as 1,900 Indian products from sectors such as chemicals and engineering get duty free access to the US market. India's top exports to the US under GSP had included motor vehicle parts, ferro-alloys, precious metal jewellery, building stone, insulated cables, leather products, garment and wires.

India retaliated by slapping higher duties on several US products, something which President Trump had taken to Twitter to term as being "unacceptable".

More recently, the US termed India a "developed" nation, thus ensuring that India is now ineligible for GSP benefits.

Countries with with a share of 0.5% or more of world trade and those with a G20 membership will no longer be viewed as "developing" nations, a recent notice by the Office of the United States Trade Representative said.

At present, India is also pressing for greater market access for its products from agriculture, automobile, automobile components and engineering sectors. The US on the other hand wants greater market access through a cut in import duties for its agriculture goods, dairy products, medical devices, IT and communication items. India has stated that it would be difficult for them to cut duties on IT products.

India's exports to the US in 2017-18 stood at USD 47.9 billion, while imports were USD 26.7 billion. The trade balance is in favour of India.

(With inputs from agencies)

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