Trump intimidates retaliatory trade tariffs against India

It seems that Trump is threatening India by retaliating trade tariffs. On Thursday US President Donald Trump threatened India and China. These two countries are the middling American trade partner and trump will soon going to reciprocate trade tariffs if they the taxing American imports were not eased.

Trump stated that “We’re going to be doing a reciprocal tax programme,” Trump said at a White House event where he simplified the tariff issue for his working class base. ”They are 50, they are 75 or they are 25, we are going to be doing the same numbers. It’s called reciprocal. It’s a mirror of tags. So they charge us 50, we would charge them 50.”

Major Trade between India and US

New Delhi is the tenth largest trading partner of Washington’s. India’s top imports from US in 2016 were precious metal and diamonds ($7.0 billion) followed by machinery ($2.0 billion), optical and medical instruments ($1.3 billion), mineral fuels ($1.2 billion), and electrical machinery ($1.2 billion).

Moreover, India also exports $ 11 billion worth of the same to US. By reducing the tariff on significant items largely benefit Indian consumers even as it helps US exports to India.

On the other side the largest US import from India is pharmaceuticals ($7.4 billion in 2016) and a Trump tariff on this will simply make generic medicines more expensive for Americans. It is to be noticed that the drugs imported from U.S are already expensive for Indians.

India remains unaffected

It seems that India is not going to be affected much by the tariffs. Thus it is might possible that major exporting countries which are facing tariff barriers in the US are likely to divert their goods to India. As India being a large consumer market.

A retaliatory Trump tariff on the $ 2.1 billion of agricultural produce US imports from India (including spices ($279 million), rice ($158 million), tree nuts ($157 million), essential oils ($151 million), and processed fruit & vegetables ($114 million)), won’t kill US consumers or Indian exporters. Basmati rice in US stores is, for instance, cheaper than in India.

Trade war may arise

Trump also weakens his own pledge by carving out tariff exceptions for Canada and Mexico. These are the third and fourth largest US trading partners. The most affected are European Union and China, which are the top two US trading partners. They have also threatened for retaliation if Trump goes forward with tariffs. It is quite possible that it may lead to trade and all over rise in prices.

A retaliatory Trump tariff on the $ 2.1 billion of agricultural produce US imports from India. This includes rice ($158 million), spices ($279 million), essential oils ($151 million),  tree nuts ($157 million) and processed fruit & vegetables ($114 million)). This will not going to affect US consumers or Indian exporters. For instance, Basmati rice in US stores is cheaper as compared to India.

Highlights:

• Donald trump is going to make reciprocal tax programme.
• India will be largely unaffected by the tariffs.
• However, the major exporting countries which are facing tariff barriers in the US might turn away their goods to India’s. As India has one of the largest consumer markets.