Traditional allies US and India are quickly descending into an ugly trade war.
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U.S President Donald Trump sent a stern warning to Indian Prime Minister Narendra Modi on Thursday as tariff wars threaten to break out on the Indian front.
Trump called India’s imposition of new high trade tariffs “unacceptable”, stating that they “must be withdrawn!”. The President’s tweet comes just days before he and the Indian PM are scheduled to meet at this week’s G20 summit in Osaka, Japan.
Trump Fires Warning Shot To Indian Ahead of G20 Summit
Trade tensions have been brewing between the U.S and India since 2018, when India increased tariffs on U.S imports by 120%. New Delhi’s hardline stance was triggered by Washington’s refusal to ease up on its aluminium and steel tariffs.
In a tit-for-tat move, Trump then removed India from its list of preferred traders, officially classified under America’s Generalized System of Preferences (GSP). According to Reuters, India was the largest beneficiary in the world from the GSP, which granted it duty-free exports worth up to $5.6 billion a year.
This month, Prime Minister Modi responded by raising tariffs on 28 U.S imported goods – enough to trigger the following tweet from President Donald Trump. Trump wrote:
“I look forward to speaking with Prime Minister Modi about the fact that India, for years having put very high Tariffs against the United States, just recently increased the Tariffs even further. This is unacceptable and the Tariffs must be withdrawn!”
I look forward to speaking with Prime Minister Modi about the fact that India, for years having put very high Tariffs against the United States, just recently increased the Tariffs even further. This is unacceptable and the Tariffs must be withdrawn!
— Donald J. Trump (@realDonaldTrump) June 27, 2019
All of this comes amid the furore caused by India in February when it demanded all foreign companies store their data within the confines of its national borders. This was part of a slew of new e-commerce rules designed to put Indian companies first, at the expense of major U.S and global counterparts.
India First Vs America First; But Not Everyone Agrees
Despite the apparent friction between the two nations’ trade policy, one U.S official sees things differently. Just hours before Trump fired the warning shot, U.S Secretary of State Mike Pompeo met with Prime Minister Modi, and came away with less acrimonious feelings than the President.
Important meeting with Prime Minister Modi in New Delhi today. The #USIndia strategic partnership is reaching new heights under the leadership of @realDonaldTrump and @NarendraModi, and we have an unprecedented opportunity to go even further in the years ahead. pic.twitter.com/w49XraQEEq
— Secretary Pompeo (@SecPompeo) June 26, 2019
Where Pompeo sought to reduce tensions, Trump sought to inflame them. While this could be a negotiation tactic from the man who wrote The Art of the Deal, others think Trump’s policies on India are over-the-top.
The same Reuters report cites U.S government sources who claim the Indian tariff situation is not as bad as Trump suggests. In 2018 the two countries traded $142 billion worth of goods, with India coming away with what Trump sees as the upper hand. Now, the President seeks to chip away at the $24.2 billion surplus India had over the U.S in 2018.