How Modi government is planning to tackle Trump's tariffs
What's the story
In response to the United States imposing a hefty 50% duty on exports from India, India is considering retaliatory tariff measures on select American goods. The potential countermeasures would be India's first formal retaliation since US President Donald Trump announced a 25% tariff on steel and aluminum from India, which was later increased to 50%. This figure includes additional penalties over India's Russian oil imports.
Ongoing conflict
Steel and aluminum dispute began in February
The steel and aluminum dispute began in February when the Trump administration imposed a tariff on these metals. India has since raised concerns at the World Trade Organization (WTO), claiming these measures are disguised as "national security" actions, but are actually WTO-incompatible safeguard duties.
Retaliation strategy
Legal grounds for retaliation under WTO rules being prepared
With Washington refusing to engage in talks, New Delhi is now preparing legal grounds for retaliation under WTO rules. Sources told Hindustan Times that the retaliation could begin with tariffs on select US goods, proportional to the damage caused by American levies. An official said, "The US is unjustly acting against India's economic interests even as the two countries are negotiating a bilateral trade agreement."
Impact on trade
Trade gap could widen further
The US exports goods worth over $45 billion to India, while Indian exports to America were worth $86 billion before the recent wave of tariffs. The trade gap could widen further if retaliatory duties are imposed. In February, Trump and Prime Minister Narendra Modi had promised to increase bilateral trade to $500 billion and start comprehensive negotiations. However, talks stalled over US demands for deeper market access in sensitive sectors, which India refused.
Negotiation impasse
Trump rules out resuming trade talks
On Thursday, Trump ruled out the possibility of resuming trade negotiations with India until the tariff issue is resolved. He said, "No, not until we get it resolved," when asked about increased trade talks with India.