Denis Rozhnovsky/Adobe Stock
The new year for India started on a positive note where trade with the United States is concerned.
On Jan. 7, U.S. President Donald Trump called up his Indian counterpart, Prime Minister Narendra Modi to discuss, among other things, reducing the trade shortfall — a move that seems to have gone down well in Indian circles.
The White House later issued a statement that said the two leaders had decided to strengthen the Indo-U.S. strategic partnership in 2019, and “exchanged perspectives on how to reduce the US trade deficit with India.”
Trade between the two nations hit a sour note in March 2018 after Trump imposed tariffs on imported steel and aluminum, seen as part of the U.S. president’s move to reduce the U.S. trade deficit and boost American manufacturing jobs.
Since then, a miffed India has threatened to retaliate, but has put off retaliatory tariffs four times, the most recent postponement now pushing the date to the end of January 2019.
Indian Steel Secretary Binoy Kumar told reporters in late December that India was in talks with the U.S. regarding exemptions to the steel tariffs. Similar relief would also be sought from Canada soon, he also revealed. His remarks came on the heels of demands made by India’s domestic steel industry.
India wants to meet the target of producing 300 million tons of steel by 2030-31, which means an increase in the per-capita demand of steel from the present 69 kg to about 167 kg.
But the Indian Steel and Commerce Ministries do not seem to be seeing eye-to-eye on trade tariffs.
A recent report in the Hindu Businessline said the steel ministry refused to accept any quantitative restrictions on exports of steel and aluminum to the U.S., which made it tough for the Commerce Ministry to ask the U.S. to remove the duties imposed in 2018.
The news report quoted an unnamed government official as saying the U.S. was unwilling to look at options other than the quantitative restrictions on imports at levels it suggested. But since the Indian Steel Ministry was not willing to accept any such restrictions, there could be no forward movement.
One source of apprehension stemming from a tit-for-tat penalty imposition was the potential fallout in diplomatic relations between the two nations.
Government calculations have shown India’s steel exports to the U.S. were down, but not so much with respect to its aluminum exports.
Besides India, the U.S. had imposed the tariffs on Japan, China, South Korea, Mexico and the E.U. members, among others.
India has to also now face a counter levy of import quotas from the European Union, further impacting its exports.
According to a new U.S. Congressional report, if India were to go on with its retaliatory tariffs against U.S. agricultural products, it would adversely impact American exports to the tune of U.S. $900 million.
Many countries had imposed tariffs on American agricultural products to retaliate against Trump’s metals tariffs.