President Donald Trump has threatened India once again with reciprocal tariffs accusing it of charging America very high duties on exports but India insists that it is not an exception as all major economies impose steep tariffs on their “sensitive’’ products.

Commerce Ministry officials said the reciprocal tariffs were against the mandate of the World Trade Organization (WTO).

“We have an on-going discussion on a trade package that would address concerns of both sides and also curb market access barriers for certain products, including agricultural. We are trying to convince the US that India is not exceptionally protective and has taken steps to reduce the bilateral trade gap,” a government official told BusinessLine .

India, however, is not giving a formal response to Trump’s latest round of offensive as it was not communicated through official channels.

In his address at the Conservative Political Action Conference in Maryland, Washington DC, on Saturday, Trump said that India was a very high-tariff nation and it charged the US a lot.

Using India as an example for all countries that imposed high tariffs on US products, Trump cited the country’s import tariff on Harley Davidson motorbikes which was unilaterally reduced to 50 per cent last year. The US President felt the duties were still too high and needed to be balanced with higher American tariffs on Indian exports.

“We want to point out to the US that all our major trade partners, be it Japan, South Korea, Australia or the US itself, charged very high rates of tariffs for specific items which was much more than the tariffs imposed by India on automobiles and wines. So, it was not correct to single out India,” the official said. Moreover, India was probably the only country to specifically work on reducing its trade surplus with the US and had actually managed to do so.

Trade deficit

The trade deficit between India and the US narrowed by almost six per cent in 2017 to $22.9 billion, according to the Trade Estimate 2018 released by the USTR earlier this year.

“With India buying oil and gas from the US for the first time in 2018 for an estimated $3 billion, the gap will shrink further. In 2019, India actually plans to increase its purchase of oil and gas from the US. This shows that India is serious about buying as much from the US as possible,” the official said.

Trump wants the US Congress to pass the Reciprocal Trade Act which would give him the authority to impose tariffs on trading partners on a particular product equal to those imposed by them.

“Imposing reciprocal tariffs on trade partners would violate the WTO rule of treating all members as ‘most favoured nations’ by imposing equal tariffs on all. It can be challenged at the WTO,” the official said.

Related Topics
comment COMMENT NOW