 "India US Trade")
Throughout last week, President Trump of the United States repeatedly irritated India with one upsetting statement or the other. India tried to pinprick the US with a proposal to impose retaliatory tariffs. Both governments should now settle down to some serious trade talks during the visit of our Commerce Minister to the US this week.
Trump claimed that he threatened use of trade as a tool to coerce India and Pakistan to cease hostilities. He asked the chief of Apple, the leading phone making company, not to make its phones in India but in the US. He said that India has agreed to zero duties on import of most products from the US. India promptly rejected his claims.
Last Monday, India notified the World Trade Organisation (WTO) of its proposal to impose retaliatory tariffs against the raising of tariffs on imports of steel and aluminium products by the US from 12th March 2025. India’s communication followed a similar notice from the United Kingdom on 9th May 2025, proposing retaliation under the WTO agreement on safeguards (AoS).
Japan followed India with a similar notification. It is difficult to understand the purpose of these proposals as all these countries are negotiating trade deals with the US. In fact, the US had already agreed to bring down the duties on steel and aluminum imported from the UK, as part of a mini trade agreement. Strangely, the notifications about the retaliation proposals of India, Japan and UK and replies of the US to Japan and UK, arguing that AoS cannot be invoked because no safeguard duties were imposed, could be seen on the WTO website till Thursday but vanished from there on Friday.
In March this year, soon after the US raised its duties on steel and aluminium, China and Canada proposed retaliatory tariffs against imports from the US and sought consultations under the WTO rules for dispute settlement. The US replied that the tariffs on steel and aluminium were hiked on the grounds of national security and that the WTO rules allow the US alone to determine what constitutes a threat to its national security and also allow exemption from application of the WTO rules in such situations. The US has taken the same stand since 2018, when it started unilaterally raising the tariffs on several products.
Meanwhile, India’s relations with Turkey nosedived following its support to Pakistan. Many tourists have cancelled their plans to visit Turkey. Importers of marbles from Turkey have also cancelled their orders. Exporters may also do so. India revoked the security clearance of an Indian subsidiary of a Turkish Company.
Last week, the US and China agreed to slash their reciprocal tariffs by 115% and negotiate further trade concessions. That has boosted hopes of better trade and economic activity throughout the world. Trump lifted the sanctions on Syria and got big trade and investment commitments from three big oil producing countries in the middle-east.
He talked of an impending deal with Iran on curbing its ambitions to make nuclear weapons. Ukraine and Russia delegations are discussing peace at Istanbul, something no one imagined before Trump came to power but civilian deaths in Gaza due to Israeli bombings continue rising.
Given Trump’s unpredictability, the challenge before our commerce minister is to yield to the US demands without appearing to capitulate.
tncrajagopalan@gmail.com
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