Trade

Trump Lambasts India's 'Unacceptable' Tariff Hike Before Meeting Modi at G20 Summit

The tone of Trump’s tweet contrasted sharply with Mike Pompeo’s recent visit to India.

New Delhi: Within a few hours of Prime Minister Narendra Modi’s arrival in Osaka, US president Donald Trump has fired his first salvo to shape the agenda of their forthcoming meeting.

In a tweet written in his characteristic style, Trump termed the recent tariffs imposed by India in retaliation to the US’s own hike on imports as “unacceptable” and called for their withdrawal. He prefaced his tweet by putting it in the context of his scheduled meeting with Modi on Friday on the sidelines of the G20 summit.

Trump’s tweet also came a few hours after US secretary of state Mike Pompeo had departed from Delhi. He left a day after trying to put a soothing balm on trade tensions with his Indian host, external affairs minister S. Jaishankar, as “great friends are bound to have disagreements”.

Both Pompeo and Jaishankar had spent considerable time in their press interaction on Wednesday to explain that the trade issues were not overwhelming US-India relations.

“Look, if you trade with somebody, and particularly they’re your biggest trading partners, it’s impossible that you don’t have trade issues.  But I think the sign of a mature relationship is that ability to negotiate your way through that and find common ground,” added Jaishankar.

He admitted that trade talks had “not been as effective as they should” in the recent past, but they left the “meeting convinced we both need to tell our governments that they need to try harder and make sure this happens”.

Also read: US’s Legacy of Using Trade Act to Steer Course of International Relations

While the tone of Trump’s tweet contrasted sharply with Pompeo’s visit, it is also not entirely surprising as the US president has publicly branded India a “tariff king”. Since the beginning of his term, he had also rebuked the Indian government several times for ‘very high’ tariffs on Harley Davidson motorcycles.

India has been in the cross-hairs of the Trump administration, since US has a deficit of around $20 billion in the bilateral trade volume.

On June 16, India increased tariffs on 29 high-value US agricultural and industrial items by up to 50%.

The hike was in retaliation to the US’s imposing higher tariffs on steel and aluminium imports last year. This had been in the pipeline since 2018 but was delayed at least eight times while India negotiated a trade package with the US. New Delhi finally felt that the retaliatory tariffs had to be implemented after the US formally withdrew India from the Generalised System of Preferences (GSP) benefits on May 23.

There had also been increasing rumble in Washington over the last couple of months that India would be the next target after China for probing trade practices by the office of the US Trade Representative.

So far, India has not been conveyed this threat through official channels, but officials have been told about the mood in USTR from several quarters.

In the 2019 report on National Trade Estimate on Foreign Trade Barriers, USTR said that India has bound tariff rates as high as 300% on certain agriculture products while maintaining a 50% tariff rate on motorcycles.

In another report in April this year, USTR had justified India remaining on the ‘Special 301 Priority Watch List’, noting that the latter continues to have a “lack of effective system” for protecting copyright and unfair trade practices in pharmaceutical and agricultural chemical sectors.

Indian sources had, however, dismissed these accusation of high tariffs. They had said that even WTO reports have demonstrated that India’s tariffs were less than that of most developing countries and even lower than some developed nations, like South Korea.