India Raises Taxes On 28 Major US Exports To The Country
As a retaliatory response to the US' removal of its trade privileges, India has announced that it is imposing a tariff hike on 28 US products. These products include US food imports such as walnuts and apples. The tariff hikes on the products will take effect this week.
India was the latest victim in US President Donald Trump's actions against countries that have a large trade deficit with the United States. Earlier in the month, Trump announced that the US will be scrapping the trade privileges it had granted India under the Generalized System of Preference (GSP).
India was one of the biggest beneficiaries of the GSP, allowing it to enjoy tax-free exports of up to $5.6 billion.
According to an Indian government notification, the scrapping of the privileges was an "unfortunate" move by the United States. India is apparently only reacting to uphold its national interests. While the added taxes for the 28 US products are now in effect, there could still be a chance for negotiations.
Indian Prime Minister Narendra Modi is expected to meet with Trump on the sidelines at the upcoming G20 summit in Japan later this month. The two leaders and their respective negotiators could potentially hatch a deal that would be beneficial for both countries.
The trade war between India and the United States had slowly been escalating after the US refused to exempt the country from its higher tariff rates for steel and aluminum imports. India responded by threatening to raise import tariffs on US goods by as much as 120 percent.
India has not yet made good in its threats and has continually delayed its implementation. Trade negotiators from both countries met on several occasions to hash out a deal that would benefit both parties. In 2018, trade between India and the United States was estimated to have been around $142.1 billion.
India is the largest importer of US almonds. The country imported around $543 million worth of almonds last year, or half of all the almond exports in the country. India also imports a lot of apples from the US, buying more than $156 million worth last year.
Indian officials are likely well aware that if they would impose higher tariffs it would only serve to escalate political and security tensions with the United States.
Fortunately, the US is much more open to negotiations with India than with other Nations. US Secretary of State Mike Pompeo mentioned this week that the country is still open to negotiations with India to resolve their trade dispute. Pompeo is scheduled to visit India within the month.