WASHINGTON :”While the media has been focused on trade war between the United States and its three main trade partners” The EU, China and NAFTA, a potential trade friction is brewing between the US and India that could negatively impact strategic partnership between the two countries.
India has begun imposing tariffs on American exports worth $240 million after it failed to get exemption from the tariff President Trump imposed this month on steel and aluminum imports that has triggered a trade war between American and its major trading partners.
According to an online Foreign Policy magazine report published Thursday, though the amount involved in tit for tat actions is smaller, compared with impact on trade between the US and the EU, China, Canada and Mexico, it is not less significant.
The United States is India’s single largest trading partner and the two countries have more than $100 billion of trade between them that accounts for about 40 percent of India’s GDP.
The report said that the US-India trade friction, which has been overlooked, could have consequences.
“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 counter-terrorism fields with the goal of stabilizing the Indo-Pacific region and countering the rise of China,” the report said.
India on Thursday started imposing duties on 29 American items that include almonds, chickpeas, and chocolates, with 28 tariffs taking immediate effect and a duty on shrimp rolling out on Aug. 4.
There have been trade issues between India and the US in the past and, since President Bill Clinton’s administration, the US has filed six separate cases against India at the World Trade Organization, but it hardly had any impact on deepening geopolitical cooperation between the two countries.
However, the report said, that the way the Trump administration has been closing its markets to imports while demanding concessions for its exports has made India nervous in the same way as it had made the US three major trading partners.
According to the FP report the 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.” In March this year, Lighthizer initiated a case against India at the WTO, which is 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.
President Trump himself has criticized Indian for imposing barriers to Harley-Davidson motorcycles by saying that the US was “getting nothing” from India. The Trump administration has also hurt Indian in the services sector by cracking down hard on the route for Indian IF sector workers into the United States.