India Retaliatory Tariffs On US

Retaliatory Tariffs

The additional tariffs go into effect on Sunday, according to a government statement, in the latest trade spat since US President Donald Trump took office as president pledging to punish countries with significant trade deficits. President Trump terminated India’s trade benefits underneath the Generalized System of Preferences (GSP) on June 5, the largest recipient of a scheme that permitted duty-free exports worth up to $5.6 billion. India described the situation as “unfortunate” and pledged to protect its national interests.

Prior to Prime Minister Narendra Modi’s initial meeting with Trump on the sidelines of the G20 summit in Japan on June 28 and 29, Reuters reported that India was ready to impose additional tariffs.

In June of last year, incensed by Washington’s unwillingness to exempt it from increased steel and aluminium tariffs, India issued an order to hike import levies as high as 120 percent on a basket of US goods.

India-U.S Retaliatory Tariffs

Before India was obligated politically to impose tariffs on US products, the Trump administration initiated two independent trade steps. The first were Trump’s steel and aluminium tariffs on India. India was among the first countries to be targeted by Trump’s national security tariffs on March 23, 2018. Trump slapped 25% tariffs on $761 million in steel imports and 10% taxes on $382 million in aluminium imports from India. In 2017, these tariffs covered around 2.3 percent of India’s exports to the US. In the 12 months since the tariffs were placed, India’s steel exports have decreased by 46%.

In May 2018, India filed a formal WTO complaint against Trump’s steel and aluminium policies. It also stated how it will retaliate, following in the footsteps of Canada, the European Union, China, Mexico, Turkey, and Russia, who all imposed tariffs in response to Trump’s national security initiatives. [2] India’s first official WTO notification stated that it would raise tariff rates on a list of US goods worth $10.6 billion. In June 2018, it updated its announcement to cover only $1.4 billion in US exports, albeit at higher rates.

Despite its threats, India did not act in reprisal in 2018, owing in part to the fact that it was attempting to resolve other conflicts at the same time.

The United States Export

In 2018, the US placed Section 232 tariffs on steel and aluminium imports from major trading partners, as well as Section 301 duties on a variety of Chinese products. Six trade partners retaliated with retaliatory tariffs on a variety of U.S. agricultural exports, including agri – food items, in reaction to these actions: Canada, China, the European Union, India, Mexico, and Turkey. In 2017, the agricultural goods targeted for retaliation were worth $30.4 billion, with higher tariffs ranging from 2 to 140 percent on particular product lines. This research examines the impact of retaliatory tariffs by state and commodity, as well as the direct export losses resulting from the trade dispute.

On March 23, 2018, the Trump Administration imposed a 25% tariff on all steel imports from the United States and a 10% tariff on all aluminium imports from the United States, citing a national security inquiry conducted under Section 232 of the Trade Expansion Act of 19625. Tariffs on imports of U.S. agricultural and food items, as well as other goods, were reciprocated by Canada, China, Mexico, the European Union, and Turkey. India has proposed retaliatory duties on apples, almonds, walnuts, chickpeas, and lentils from the United States, but has postponed implementation until further talks with the Trump administration.

Retaliatory Tariffs Example

A tax levied on imports by a government to punish another country for taxing its own exports: China retaliated by threatening retaliatory tariffs on a wide range of US products. 

The US Trade Representative (USTR) has proposed retaliatory tariffs on Indian shrimp, basmati rice, gold and silver items, bamboo products, wood furniture, cigarette paper, cultured pearls, precious or semi-precious stones, and token-operated arcade games, among other things, in response to the 2% equalisation levy, or so-called Google tax, which took effect on April 1, 2020.

Conclusion

President Donald Trump is suddenly changing direction on most trade problems, opting to slap penalties on India instead. His administration has raised tariffs on 14 percent of India’s exports to the US since the beginning of 2018. India replied recently by imposing new duties on around 6% of US exports to India, including $600 million in California almonds.

There are a lot of parallels with Trump’s trade conflict with China. The most significant is doubt that Trump’s escalation will solve the trade relationship’s difficulties. Despite the apparent contrasts with China—namely, that the trade relationship and tariff battle are smaller—the fear is that this is merely another pretext for the self-proclaimed “Tariff Man” to slap even more tariffs on yet another country.