India hikes duty on 30 items imported from the US as a counter measure

India has been sucked into the whirlpool of a raging global trade war involving the big boys. And, the country finds itself in the midst of a massive tariff and trade re-engagement with the US on the one side, and the European Union and China on the other. While the US under President Donald Trump slapped prohibitive duties impacting trade worth $250 billion with the EU and China, the impact on India is not very huge. The Republican Administration’s trade war resulted in $241 million additional duties on export from India without rhyme and reason. Trump’s repeated jingoistic statements of Indian duties on Harley Davidson’s high-end motorcycles also do not hold much water.

In global markets, India is not particularly known for swift retaliatory action in terms of slapping prohibitory duties on any item or targeting a country in particular. During two terms of Manmohan Singh and four years of Narendra Modi what India sought was ‘fair play’, a ‘live and let live’ approach with all its trading and investment partners. This approach has not cut ice with the ‘loud and self defeating style’ of President Trump that does not spare even the closest of US allies. While the Chinese and the Europeans have retaliated with reciprocal duties on US products, India took some time to weigh its options.

On Thursday, India hit back with heavy duty hikes on 30 items imported from the US, ranging from almonds, nuts, lentils, steel and a host of assorted iron and steel products. As a result, US companies will fork out equivalent additional duties worth $241 million to keep their trade with Indian consumers intact. The biggest item on the list was almonds given that India consumes over 50 per cent of total US exports every year. Barring a couple of items, enhanced duties on most products came into immediate effect. This drives home the point that President Trump’s actions are not taken kindly by Modi’s regime in India.

The Trump administration has not appreciated that India slashed duties on the high-end motorcycle imports from the US to 50 per cent from the earlier 75 per cent. Instead, the US has been pushing India to do more on other products and phase out the $35 billion surplus in bilateral trade that touched $115 billion in 2016. Given that trade war between large economies was not going to end anytime soon, India will have to move with caution. A US trade delegation that is expected to land in New Delhi next week must be engaged positively to drive home the Indian point of view.

Both, US and India will have to engage in sorting out differences on the trade front and not escalate the war whose implications will be felt for long. India will have to move deftly and weigh its options, especially in backdrop of the full-scale trade war between China, EU and US.