India became the latest country to raise tariffs on imports from the US, targeting $240m worth of American goods in retaliation to President Donald Trump’s decision to raise duties on steel and aluminium imports.
New Delhi issued a notice on Thursday saying it would increase duties on a range of items, including chickpeas, walnuts, almonds and lentils. But ministers backed down from an earlier plan to raise the levy on larger motorcycles, which would have hit Harley-Davidson — a company Mr Trump says has been “ripped off” by Indian trade rules.
The new tariffs will take effect from August 4.
Mr Trump announced in March he would impose a 25 per cent tariff on steel imports and a 10 per cent tariff on aluminium.
The metals tariffs have already invited promises of retaliation from a wide range of US trading partners from Canada and China to the EU, which said it would slap 25 per cent tariffs on dozens of US products from orange juice to pleasure boats.
The conflict over steel and aluminium also comes alongside threats of a broader trade war. The US will on July 6 begin imposing tariffs on up to $50bn in Chinese imports in what the White House says is retaliation for years of state-backed intellectual property theft by Chinese companies.
After China said it would retaliate against the IP tariffs, Mr Trump ordered his administration to draft a list of tariffs on a further $200bn of Chinese imports to take effect unless Beijing abandoned its plans to fight back.
India exports only about $1.5bn of steel and aluminium to the US each year. But officials in New Delhi are worried that Washington might also increase tariffs on items such as pharmaceuticals, which are a bigger source of revenue for India.
The Indian government has joined other governments in filing a complaint against the US at the World Trade Organization, but Washington responded by filing its own complaint about Indian export subsidies.
The issue has caused the biggest rift in the otherwise warm relationship between Mr Trump and his Indian counterpart Narendra Modi. India had hoped to be granted an exemption from the higher US steel and aluminium tariffs on the basis of the “strategic partnership” between the two, but was refused.
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Last week Mr Trump specifically named India in his complaints about trade terms, accusing the country of charging 100 per cent tariffs on some US goods. “We’re like the piggy bank that everybody is robbing,” he said.
Washington also wants New Delhi to remove price caps on medical equipment and allow dairy items to be imported from the US. It has also added India to a “watch list” of countries with potentially questionable foreign exchange policies, alongside China, Japan, Germany, South Korea and Switzerland.
Both sides, however, are hoping that these issues can be resolved through negotiation before the new Indian duties take effect. Mark Linscott, an assistant US trade representative, is due to visit India next week to begin what officials say will be a series of talks.
Source: Financial Times