Trade war with India is not in America’s interest. Even during the first term of the Donald Trump administration, except for a few years, India had a trade surplus with America. The prestigious economic research institute ‘Research and Information System (RIS) for Developing Countries’ This has been said in a report.
RIS publishes ‘Trade, Tariffs, and Trump’ The report titled ‘India should immediately consider appointing a task force or creating other institutional arrangements to bring domestic policies in line with the current situation.’"text-align: justify;">In a session organized on this topic on Tuesday, participants said, ‘‘The performance of the American economy is strong. Its gross domestic product (GDP) growth rate is estimated to be 2.7 to 2.8 percent in 2024 from 1.9 percent in 2022, but trade deficit will remain an important issue for the upcoming Trump government.’
RIS said, ‘‘In such a situation, there is a fear that the Trump government in its new term may impose tariffs by taking some corrective steps due to the high trade surplus with India. However, structural changes take time.’’
India continues to be in a trade surplus with the US. India has consistently maintained a trade surplus with the US over the past two decades, with the sole exception of 2008.
China, Mexico and Canada account for more than 40 percent of America’s total trade deficit of $1,050 billion in 2023. India ranks ninth among the top 10 countries in this matter with 3.2 percent share.
RIS said, ‘‘Trade war with India is not in America’s interest. However, the adoption of new policies may have a temporary short-term impact. But it has been seen that these things become balanced in the future.’’
According to the research institute, things are balanced when the affected countries take active steps. These measures include unilateral tariff increases, applications to the dispute settlement body at the World Trade Organization (WTO). These efforts have proven important in reducing America’s adverse influence and ultimately reduce the pressure exerted by the US government.
The report says, ‘‘There was a sharp decline in the level of India’s trade surplus during the first term of the Trump administration, especially in 2018. But this decline was short-lived and India’s bilateral trade surplus with the US continued to remain high until Trump’s term ends in 2021.’’
Regarding the duty rate, RIS said that in terms of sectors and products, there is a strong possibility that the new US government may impose higher tariffs, especially on final consumption goods i.e. consumer goods. It could be an easy target in terms of India’s pharmaceutical, gems and jewellery, fisheries, especially shrimp tariffs.’’
RIS said, ‘‘In such a situation, India will need supply arrangements for products like key chemicals (APIs) for the pharmaceutical sector to meet the standards of the US regulator USFDA and ensure quality. Also, to reduce the impact, attention will have to be paid to other markets.’’
According to the report, value addition can be important in terms of export of jewelery to America. In the case of shrimp, there may be a need to further strengthen hygiene and sanitation measures.
RIS Director General Professor Sachin Chaturvedi said, ‘‘India should immediately consider creating a task force or other institutional arrangements to bring domestic policies in line with the current situation.’’
He said, ‘‘Also, India should maintain comprehensive engagement with America. Apart from this, a new institutional framework should be found to resolve issues related to trade, investment, technology etc.”
