US moves to bridge $24-billion trade deficit with India

After the IT industry, it is now the turn of the manufacturing sector to brace itself for a possible jolt from the Donald Trump regime in the US. Washington DC has officially sounded out to New Delhi that it would soon take steps to bridge the $24-billion bilateral trade gap, which is in India’s favour.

Assistant US Trade Representative Mark Linscott, who met senior officials from the Commerce Ministry last week, said his government would identify the barriers to trade impeding American exports through trade policy dialogue so that steps could be taken to redress the problem, a government official told BusinessLine .

“Linscott said that the USTR office had every intention to work on reducing the trade gap between the two countries as it was adversely affecting the American industry and it would also explore why Indian exports had surged,” the official added.

The Indian Commerce Ministry team, led by Additional Secretary Anup Wadhawan, emphasised that bilateral trade was mutually beneficial as both were sourcing things from each other that were more competitive and gave consumers more value for money.

It was also pointed out to that the US had traditionally followed the policy of benevolence towards economically less developed countries and running a trade deficit with them was never a problem.

“The US team appreciated some of the points raised by India but it stuck to its initial stand that the trade deficit has to go down,” the official said.

US President Donald Trump has given the USTR and the US Commerce Department time till June-end to find out the reasons behind the country’s $500-billion trade deficit per annum. India’s $24-billion trade surplus with the US, however, fades into insignificance when compared to China which runs a surplus of $347 billion with the country.

“While China is the main target when the US talks about bridging its trade deficit, it is unfortunate that countries like India have also been made subjects of scrutiny and possible retaliation,” the official said.

Indian exports to the US, including steel, textiles, gems and jewellery, automobile and components, food and leather, could all be potential targets for restrictions if the country decides to go on a drive to bridge the current deficit by reducing imports.

Lobby groups have already started working in the US to influence policies against certain Indian products such as steel. Late last month, an influential group of nine Democratic Senators asked Trump to not let a Canadian company use foreign made steel, in particular from India and Italy, in the transnational multi-billion dollar Keystone oil pipeline.

Trump also recently alluded to India’s high import duties on automobiles and motorbikes and said that US companies like Harley Davidson had been suffering for years due to tariff barriers. “India’s high duties on certain items, including motorbikes, do not discriminate against US companies as they are uniformly applicable on all. We told as much to the USTR team,” the official said.

India is currently the US’ ninth largest goods trading partner with $67.7 billion in total (two way) goods trade during 2016, as per USTR figures.

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