Why is India imposing tariffs on US imports? Read here

India is set to introduce tariffs worth $240 million on a list of 30 imports from the United States. This is New Delhi’s retaliation on the higher tariff on Indian steel and aluminium by the Trump administration.

The move is significant as it comes a day after Commerce Minister Suresh Prabhu returned from the US and just weeks ahead of further talks between the two countries on the issue.

Here is how it unfolded

• India notified the revised list including almonds, apples, phosphoric acid and motorcycles with engine capacity of more than 800 cc (including Harley Davidson motorbikes), on which it intends to impose retaliatory tariffs, to the World Trade Organization (WTO) .
• On 18 May, India had given the WTO a list of 20 items imported from the US worth $166 million on tariffs were to be increased.
• In the revised list, India has increased the products but lowered the proposed maximum additional duties from 100% (on walnuts) to 50% (on Harley Davidsons).

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• India had asked the US government to exempt it from its 25% levy on steel and 10% on aluminum imposed by Trump on many countries including allies like EU, Canada and Mexico. The US rejected the request by India.
• Trade minister Suresh Prabhu said on Friday after a two-day US visit that the talks he had with American officials were held in a positive atmosphere and that trade negotiators from both sides would soon meet to resolve pending issues.
• Assistant US trade representative Mark Linscott is likely to visit India in the last week of June to negotiate a “trade package”, the official cited above said.
• The package is likely to involve negotiations granting an extension to India on generalised system of preferences (GSP) that the US is currently reviewing. India exports about 3,500 items worth $5.6 billion to the US at zero or low duties. India in exchange may facilitate more US imports in items such as dairy products and Harley Davidson bikes.

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India is not the only country which has decided to impose tariffs on US imports. On Thursday European Union approved tariffs targeting US goods including whiskey, blue jeans and motorcycles in retaliation against duties imposed by Trump on European metals.

On the other hand, Trump has announced tariffs on imports from not only India and EU but also on $50 billion of Chinese imports. Beijing has said it will respond with “equal scale, equal intensity.”

The response from India, China and the European Union to unilateral tariff movies by the Trump administration signals an escalation of their trade disputes.