US President Donald Trump calls himself “A Tariff Man” and he seems to be stubbornly living up to his self anointed moniker, even if that comes at the cost of the financial health of his own country. After initiating a trade war against his arch rival China and jamming a slowdown in growth down the throat of the world economy; Trump’s next target was India.
India has a trade surplus with the US for the last many years, this means that we export to the US more than we import from them (which is a good thing for India). And India being a developing country, our import duties are usually higher that those applicable for similar exports to other nations.
Trump, viewing this as unfavourable for America, decided to levy higher import duty on steel and aluminium products by 25% and 10% respectively.
The Indian government, not wanting a situation like the one that developed between USA and China and to assuage the impulsive Donald Trump, had delayed imposing retaliatory tariffs on imported goods from the US a record eight times since 4th of August of last year, all the while trying to negotiate with them and requesting the US to exempt India from higher tariffs.
However, after dragging its feet for almost a year, the government has decided to increase tariffs on 29 high value agricultural and industrial imports by up to 50% which is slated to take effect on June 16th.
With the implementation of these retaliatory tariffs, India may get from anywhere between $ 217 million to $ 235 million in additional revenue, which, according to the commerce department would equal the loss faced by Indian industry after US tariffs on steel and aluminium products kicked in.
However, what is not good news is that the strain in trade ties between the US and India comes at a time when global growth rate is expected to slow down as trade tensions between US and China weigh on business confidence. The International Monetary Fund (IMF) has as well in April downgraded global growth to 3.3% from 3.5% predicted earlier in the same year.