New york/washington: US President Donald Trump’s move to levy a sweeping 25 per cent tariff on Indian imports is a “major setback” in bilateral relations at a time when New Delhi is striving to become an alternative destination to China for American investors and traders, a former US Trade Representative official said.
“While there were early indications that a trade deal with India was imminent, it turned out that this was not possible,” Senior Vice President of Asia Society Policy Institute (ASPI) and former Deputy US Trade Representative Wendy Cutler said in a statement.
Trump announced imposing a 25 per cent tariff on all goods coming from India starting August 1, plus an unspecified penalty for buying Russian crude oil and military equipment. The surprise announcement came a day after Indian officials said that a US trade team would visit from August 25 to negotiate a trade deal.
Cutler said the 25 per cent tariff assigned to India is a “major setback” in US-India relations at a time when Delhi is striving to become an alternative destination to China for US investors and traders.
“Hopefully, the high tariff will spur India to reconsider its current positions and take bold steps to address US concerns, including lowering its tariffs and eliminating the litany of non-tariff measures it imposes,” she said.
Pointing to India’s “domestic protectionist forces” that have obstructed trade deals earlier, Cutler said there were hopes that things were different this time around but “they never materialized”.
ASPI’s Director of South Asia Intitiatives Farwa Aamer said there was strong optimism around the robust five rounds of trade talks, but clearly there was not enough to satisfy Washington’s expectations.
“These negotiations were always going to be complex, and even with an early start to the talks, the timeline was too tight given India’s sectoral concerns and strong reservations on opening access to its dairy and agriculture markets,” Aamer said.
The 25 per cent rate is much higher than that of Japan, Vietnam, and Indonesia, which means India loses some of its competitive advantage. “This will certainly impact the export sector, making the case for fast-tracking negotiations on the BTA as they go into the next round of talks in August,” she said. Aamer added that the measure may also “dim” the confidence in the US-India bilateral relationship.
“There is the India-Pakistan ceasefire mediation narrative that the president has championed and India has repeatedly dismissed. The Russia and BRICS angle is another factor. All eyes are on how India will deal with this ‘temporary measure’,” Aamer said.
Former advisor to President Joe Biden and a Democrat Ajay Bhutoria voiced “serious alarm” over the 25 per cent tariff and penalty announced by Trump on India, characterizing this action as “signalling the deepest decline” in India-US relations under the current administration.
In a post, Trump said that the US has a massive trade deficit with India and also criticised India for buying a “vast majority” of its military equipment and energy from
Russia.