U.S.’s New Trade War!

After a trade war with China, U.S. is brandishing a new one with India and Turkey. After months of simmering trade tensions, President Trump is pushing through with his threat to punish India (Washington Post, March 5, 2019). The preferential treatment or a duty-free status for a number of Indian goods will end. The changes will not take effect for at least 60 days. Turkey’s benefits under GSP will also end.

The move against India is contrary to a one-time desire of the U.S. to cultivate India as a strategic partner. Trump’s frustrations are reflected on Harley-Davidson’s motorcycles being levied a 100% tariff by India. Harley-Davidson has bypassed this by assembling its bikes in India. The U.S. trade deficit with India is at USD27.3 billion in 2017. India is GSP’s biggest beneficiary and exports about USD5.6 billion in goods to the U.S. – about 10% of India’s total exports to U.S. Despite trade frictions U.S. exports to India grew by more than 25% in past 12 months.

Compared to U.S.-China trade of USD648.5 billion (in 2016), the U.S.-India trade is only USD114 billion for the same period. U.S. Commerce Secretary, Wilbur Ross defended Trump administration’s decision to impose tariffs, saying it is a defence against years of “bad practice”.

U.S. is invariably driving nations together through its actions. China, India, Europe and Asean could form a new trade bloc (“Euciean”) while America is left with Mexico and Canada (“USMCA”). That my friends, is Trump’s idea of “free trade” and “globalisation”.

References:

1. It’s official: India is Trump’s next target in trade wars, Nina Masih, The Whashington Post,March 5 2019

2. India imposes retaliatory tariffs on U.S., widening global trade war, Annie Gowen, The Washington Post, June 21, 2018