Donald Trump Warns India on Tariff: About a month before taking office, America’s next President Donald Trump has indicated that he will take a tough stance on trade relations with India. Trump has said in a recent statement that in response to India’s high tariffs i.e. import duty, America will also be ready to impose equally high tariffs. He has clearly said that in matters of trade with India, his government will follow the policy of ‘Tax for Tax’ (Reciprocal Tariffs). Trump has said in a warning tone that if India imposes 100 percent tariff on American products, America will also impose the same tax on Indian products. In America, Donald Trump is to take over as President on January 20, 2025.
What did Trump say about India?
During a press conference in Mar-a-Lago, Florida, Trump said that India and Brazil are among the countries that impose high tariffs on some American products. He said, “The word reciprocal (reciprocating action) is important, because if someone imposes tax on us…if India imposes 100 per cent tax on us, will we not tax them? For example, we send them cycles and they also send us cycles…they charge Rs 100-200 from us. India charges too much…Brazil also charges too much. If they want to recover from us then it is fine…but we will also recover the same from them.”
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New in India-America trade relations challenge
Even during his first term, Trump has called India a “tariff king”. In such a situation, his latest statement indicates that even in his second term, new challenges may arise in the trade relations between the two countries. Trump clearly says that countries like India impose very high tariffs on American products, due to which American products are not able to compete in India. This attitude of Trump can have a direct impact on India. America is the biggest export market for India. In the financial year 2023-24, India exported $77.52 billion to the US, while imports from the US stood at $42.2 billion. If America imposes high tariffs on Indian products, it may have a negative impact on India’s IT, pharmaceuticals and textile industries.
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What lessons were learned from Trump’s last term?
Even during his first term from 2017 to 2021, Trump has raised many controversies in trade relations with India. He increased tariffs on many Indian products and removed India from the list of Generalized System of Preferences (GSP). Due to this, it became difficult for many Indian products to reach the American market. In response, India also took action and imposed tariffs on American products. However, both countries strengthened strategic relations despite these trade differences. In particular, how good the coordination between PM Modi and Trump has been, is indicated by events like ‘Howdy Modi’ in America and ‘Namaste Trump’ in India.
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Balance of challenges and possibilities in Trump 2.0
It can be expected that due to the strong chemistry with PM Modi, Trump’s second term will not be completely negative for India. If Trump increases tariffs on Chinese products, new opportunities may open up for Indian exporters in the American market. During Trump’s first term, his tough stance on China created space for Indian products in the American market. Also, India-US defense and strategic partnership may become stronger during Trump’s tenure. Both countries have similar views regarding the growing influence of China and this partnership can help in reducing trade tensions.
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What will India have to do?
Keeping Trump’s viewpoint in mind, India will also have to strike a balance with some adjustments in its trade policies. To protect domestic industries, India will have to keep its tariff policy strong, but at the same time necessary steps will have to be taken to improve trade relations with America. For example, India may have to reduce tariffs on some American products, so that trade tensions with America can be reduced. In return for this, India can negotiate with the new Trump government for inclusion in the Generalized System of Preferences (GSP). Apart from this, keeping in mind its long term interests, India will have to focus on reducing its dependence on America in terms of exports and for this it will have to strengthen its trade relations with other countries.
Overall, Donald Trump’s stance of “Reciprocal Tariffs” may create new challenges for India, but during his tenure, India will also get an opportunity to strengthen mutual strategic partnership by adjusting its trade policy. Could. It is certain that during Trump’s second term, India will face the dual challenge of protecting its economic interests while maintaining better trade relations with America.
