India announces tariffs on U.S. products. . .
At the end of May Washington revoked India’s status as a beneficiary developing country under its Generalized System of Preferences program, which is designed to promote economic growth in certain developing countries through preferred duty-free access to the U.S. market. This adds to U.S. tariffs already in place against Indian steel and aluminum. In response, India’s government announced it is increasing tariffs on 28 goods exported to India from the U.S., effective on June 16.
Another trade war? Not yet . . .
While India’s imposition of tariffs on the U.S. could escalate to a full-on trade war, its impact on the bilateral economic relationship remains modest, for now. The U.S. buys a lot more than it sells to India, which provides the U.S. with considerable leverage. And due to the very limited nature of India’s new tariffs, they are seen as being largely symbolic. The bilateral relationship is very important to both parties on multiple levels, and the two have made much progress recently on defence and security issues. But India faces a variety of difficult decisions on trade and security files, such as whether or not to allow Huawei to participate in building 5G networks, that could further impact the U.S.-India bilateral relationship. Time will tell.
U.S.-India relations at a crossroads . . .
Since the inauguration of Donald Trump, the U.S. has used tariffs to force trading partners to offer increased access to their domestic markets for American goods and commodities on better terms. U.S. Secretary of State Mike Pompeo is scheduled to visit India on June 24, ahead of the planned bilateral meeting between India’s Prime Minister Narendra Modi and U.S. President Donald Trump in advance of the June 28-29 G20 meeting in Japan. The results of these meetings will be key to the next phase of U.S.-India relations, which appear to be at a delicate crossroads. Canada should follow developments closely as India is one of the U.S.'s key allies in Asia and the latest one facing economic pressure from Washington.
READ MORE
- CNN Business: India is hitting the United States with more tariffs
- The Diplomat: US-India ties under Modi 2.0: The good, bad, and ugly
- Council of Foreign Relations: U.S.-India relations
