When you see the words “trade deal,” we instantly think of China, but the U.S. has embarked on a multitude of trade disputes with longtime trading partners.
To a greater or lesser extent, some progress is being made on most of them.
One trade deal on which it was hoped there would be some progress before next year’s presidential elections is the not oft-covered but still meaningful deal with India.
According to the advisory firm Stratfor’s recent Worldview report, the U.S.’s bilateral trade with India totaled $142.1 billion last year.
But as with the U.S.’s trade balance with most emerging markets, the balance of trade is in favor of the developing nation.
India exported $83.2 billion worth of goods and services to the United States and imported $58.9 billion, resulting in a $24.3 billion surplus for India.
Rather implausibly, President Donald Trump has called Indian Prime Minister Narendra Modi the “tariff king,” demanding that New Delhi reduce its trade surplus with Washington and lower tariff barriers for U.S. commerce in India.
Expectations of a deal were boosted by comments Trump made and tweets about a meeting between U.S. Trade Representative Robert Lighthizer and Indian Commerce Minister Piyush Goyal on the sidelines of the U.N. General Assembly this month.
However, despite a mix of hype and threats, the two sides could not reach an agreement.
According to Stratfor, the U.S. is looking for concessions by India on information and communication technology, dairy, pharmaceuticals, agriculture, e-commerce, and data localization – a pretty full list. However, the U.S. failed to get much movement on any of these issues.
India, on the other hand, is anxious to avoid any escalation in tensions. In particular, India is looking to avoid a U.S. investigation under Section 301 of the Trade Act of 1974, which could bring even higher tariffs on Indian products and, potentially, over a wider range of goods.
Companies sourcing from or looking to source product from India will be disappointed that both sides look like they will retain high tariffs for now.
The article reports that in June, President Trump revoked India’s tariff benefits under the Generalized System of Preferences after receiving complaints from the U.S. medical devices and dairy sectors about difficulties in accessing the Indian market. That move prompted India to institute tariffs in June against 28 U.S. goods, hurting apple exporters from Washington state and almond exporters from California (among others).
Like most trade disputes, this will likely go through a series of tit-for-tat moves until such time as both sides are ready to make some compromises. While India is not known for stealing intellectual property in the way China has so blatantly done for much of this century, its policy of protecting domestic producers behind import tariffs is deeply entrenched.
It will take considerable patience and time to achieve wholesale change to the current tariff structure.
For now, U.S. consumers should probably reconcile themselves to the current cost structure — at least until this side of the election.