India Is the Latest Front in Trump’s Endless Trade War
U.S. President Donald Trump has been starting trade wars on all fronts, with escalating spirals of tariffs between the United States and its three main trade partners: the European Union, China, and NAFTA. But there’s a smaller yet no less significant part of the protectionist tit for tat that’s been overlooked: the fight between the United States and India.
This quarrel has the potential to erode the burgeoning strategic partnership between the world’s two largest democracies, which have been closely aligned in military and counterterrorism fields with the goal of stabilizing the Indo-Pacific region and countering the rise of China.
Trump struck the first blow with his steel and aluminum tariffs. India tried hard to get an exemption but failed. And so, on Thursday India began imposing what it deems proportionate payback worth $240 million on 29 American export items including almonds, chickpeas, and chocolates, with 28 tariffs taking immediate effect and a duty on shrimp rolling out on Aug. 4.
The U.S. side was pressing for trade reciprocity even before the Trumpist trade hawks swooped in. Since President Bill Clinton’s administration, the United States has filed six separate cases against India at the World Trade Organization. Despite these conflicts, the deepening of geopolitical cooperation rarely halted. But the unilateralist and rigid way the current U.S. administration is closing its market to imports while simultaneously demanding concessions for its exports has rattled India as much as it has the rest of the world.
India was already on the radar of the’ neomercantilists calling the shots in Washington, although not to the same glaringly visible extent as China, the EU, Canada, and Mexico. U.S. Trade Representative Robert Lighthizer has challenged India’s export subsidy policies as instruments “to sell their goods more cheaply to the detriment of American workers and manufacturers.” He initiated a case against India at the WTO in March, the first such complaint since 2013, and also threatened to revoke the non-reciprocal trade benefits India enjoys under the Generalized System of Preferences by virtue of being a developing nation.
The United States is India’s single largest trading partner, with the two-way flow totaling more than $100 billion or more a year, and total trade makes up 40 percent of India’s GDP. There is considerable worry that Trump’s trade war will jeopardize India’s economic boom, with GDP growing at 7.7 percent in the last quarter of 2017.
Indian equities and stocks fell by over 1 percent as the shadow of Trump’s trade war descended, reflecting worries not just about the tariffs but about the reduction of U.S. foreign direct investment into India, and for the fate of Prime Minister Narendra Modi’s signature “Make in India” manufacturing initiative. Modi’s push to transform India into a manufacturing superpower depends on the free flow of capital and the openness of global markets.
India feels unfairly singled out because its trade surplus with the United States, at just shy of $25 billion, is so small compared to China’s nearly $350 billion, or even to Japan’s $69 billion, Germany’s $65 billion, or Mexico’s $63 billion.
Unlike China, which is breathing down the neck of the United States in cutting-edge sectors, Indian industrialization is still relatively immature and not top of the line. Some strategists even contend that a full-blown U.S.-China trade war would benefit India, as friction between Washington and Beijing might redouble New Delhi’s value in Washington’s eyes as a less confrontational actor.
Yet, given the existential dread that informs how India views the rise of its giant neighbor China, Modi’s government has preferred to tone down the criticism of Trump’s trade harshness so as not to alienate the United States completely. India’s rhetorical reaction has been muted compared to other participants in the burgeoning trade war; even while filing suit against the United States at the WTO, India is still keen to work out its trade differences with the Americans through bilateral channels without spoiling strategic coordination.
But these softly-softly methods are unlikely to cut any ice with an administration locked into the zero-sum logic of Trumpian economics and barely cognizant of geopolitical nuances. Of course, the U.S.-India strategic partnership has other legs besides trade and investment. But if these economic pillars wilt under the stress of Trump’s populism, the quest for a long-term balance of power in Asia could be fatally set back.
wolf pfizer22 hours ago
Trump is making China great. India was our only ally in the region. It was to be our counterweight to China. Guess...no more.......
Trump makes America great again!
India will be another trade Taliban for US. History will prove so. Very cautionary math is essential in such case. India now bets on China and Russia , there is a prevailing sense that India may join One belt one road initiative (OBOR) a Chinese one. India has a problem with next door neighbor Pakistan which hurdles its ambitions but its inevitable for India to settle regional disputes to pace its socioeconomic growth .
Mr.Modi,your bear hugs have gone in vain.The honeymoon is over.
Gee what kind of tariffs does India have on the US Yahoo ?
After hitting Turkey , a strategic NATO ally , now it is India , the biggest democracy in the world . Something must be wrong with the present tariff imposition policy of President Trump . The surplus-deficit figures do not tell all since America is still the overwhelmingly No. 1 economic power in the world. On a per capita basis , the average Americans are earning 4 times more than the average Chinese .
Steve23 hours ago
India needs use more then we need them, they need our jobs
Sorry India you will have to wait for now. Trump and GOP are at war in America and the rest of the world first.
Good. thousands of indians have been taking advantage of the H1 visa program which is essentially a multi-billion dollar aid package for indians
Mark23 hours ago
Our "great" "president." How can he make the most money pretending to care about the US?
Finally, US customer will pay.
Anonymous13 hours ago
Thank you Mr Trump for putting America first - -
India has 100% tariff on Harley Davidson imports. Nobody can win India in a trade war!
michael17 hours ago
What do we get from India. We get heavy thick accented voices over the phone from H-1B visa Indians with a job, professing to get jobs for Americans without jobs. How in hells bells does that work?
CommonMan15 hours ago
Most of the commodities India exports are available here. Why import these stuff, I don't understand. I suppose, help Indian labor market and financial system.
I like the real war Fkk this currency or trade war. let's Bomb each other see who will survive.
AV8B4ME15 hours ago
Trump understand that fair trade means fair trade...regardless of who you are.
Raymond13 hours ago
Don't worry India. Democracy has not worked for you, Modi is already moving the country toward Trumpian tribal autocracy, making India Hindu Again like making America White Again. Pretty soon you can be just like us.
trump will leave no stone unturn in dooming america. what a dilemma for democracy loving country who illegally elected president try to turn into Uganda
George14 hours ago
This guy really made America Great again. No country in the world has even an ounce of respect for us. It just took 500 days to take down, what was built in 50 years.
heat13 hours ago
Yet the Russian sanctions are on hold.
send Indian IT mafia ...back home
Robert21 hours ago
Trump is an idiot. Hopefully after the November elections he will be impeached.
Netanyahooo13 hours ago
India should be forced to crack down on SCAM call centers or face deportation of all H1Bs and halt new ones.
Abdul9 hours ago
lol ... america is a democracy?? it is more like a brutal summer camp for refugee children
Mozi13 hours ago
lool....so much for the "diplomacy of hugging the men" by darinda modi ....take that indiot!
Government is corruptyesterday
Go get them President Trump! It's about time a President has the balls to go after the countries taking advantage of the USA.
Wasim Farooqui14 hours ago
Good for stupid Indians they supported him and made him their God