Dry fruits, shrimps, chemicals and motorcycles all figure in the list of US imports that are set to attract a higher duty soon and represent a crafty trade reaction by India to threats of 'reciprocal tariffs' by Donald Trump.
India has notified the World Trade Organisation (WTO) on Wednesday of its decision to impose higher import tariffs on 30 US goods - including motorcycles and heavy machinery as well as a large number of agro products such as almonds, shrimps and chocolates - which is expected to rake in an additional $240 million.
The move comes after New Delhi received a cold shoulder from Washington DC on its request for exempting India from the higher tariffs announced by the US on steel and aluminium imports. "Our estimates place a combined $240 million loss for India on account of Mr. Trump's steel, aluminium tariffs and we felt a reciprocal tariff of a similar amount on US imports would be fair," a senior Commerce Ministry official said.
He added that the list was prepared keeping in mind the relentless attacks by the US in certain sectors. As a result, motorcycles above 800 cc have been kept in it despite having only small amount of trade since Trump has used Harley Davidson bikes as an instrument to attack India on alleged market access issues. On the other hand, repeated calls by US-based trade bodies to penalise Indian exports of lobsters may have been the reason behind American Brine Shrimps finding its way into the list of tariff hikes.
With the revised duties coming into force from June 21, the pressure is now on the US, which under President Donald Trump, has taken a belligerent stance on trade with major partners. On Saturday, China also announced higher tariffs on $34 billion worth of American agriculture and automobile exports.
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For a number of the items on which India has decided to hike duties, the United States is the largest seller to India such as for artemia shrimp, almonds and apples. "Such sudden decisions obviously affect the long-term planning as well as profit margin of businesses. The government should stick to whatever policy decision they take for at least one production season so that the industry has time to adjust itself. Although domestic production has picked up in recent years, local supply is nowhere near fulfilling the current demand." Kartik Jalan, CEO of Kailash Agro said.
Industry insiders also pointed out that dry fruits imports from the US have continued to strengthen over the past few years and the strong industry associations based in the US will not easily let go off a huge market such as India.
India's move comes at a time when it is bilaterally trying to negotiate several trade issues such as market access and tariff hikes. Days after a visit to Washington DC, Commerce and Industry Minister Suresh Prabhu on Friday said that senior officials from both sides will meet before the end of the month to discuss trade issues.
Trump’s argument that US exports are facing higher tariffs while it allows imports at lower duties led to executive decisions earlier this year levying an additional tariff of 25 per cent on steel and 10 per cent on aluminium imported from all countries. India’s steel shipments to the US are about 3 per cent and aluminium exports are slightly higher than 14 per cent of total outbound shipments of both products.
ALSO READ: Why Trump's zeal for tariffs is yet to derail global economic outlook
Interestingly, India had termed the move 'unilateral and unfair', dragging the US to the World Trade Organisation’s dispute settlement body. After that, India had last month informed the WTO that it intended to impose higher tariffs on 20 items. The latest communication to the WTO has revised the product list as well as what we estimate to be the hit to India, the official said.
"I strongly feel that if you do not respond adequately, you cant get someone to come to the negotiating table. For Trump, everything is like a business deal. The US hasn't respected the multilateral system recently but if it feels the tariffs are unjust then they should go to the WTO." Biswajit Dhar, Trade Expert and Professor at the Jawaharlal Nehru University said.
This has been a week of tariff hikes by nations. European Union nations on Thursday approved a raft of tariffs targeting US goods including whiskey, blue jeans and motorcycles in retaliation against duties imposed by Trump on European metal exports. The European countermeasures target $3.3 billion of American imports.
A day later, the United States Trade Representative announced that the US will initially impose an additional 25 per cent tariff on 818 Chinese imports worth about $34 billion beginning July 6.
India has notified the World Trade Organisation (WTO) on Wednesday of its decision to impose higher import tariffs on 30 US goods - including motorcycles and heavy machinery as well as a large number of agro products such as almonds, shrimps and chocolates - which is expected to rake in an additional $240 million.
The move comes after New Delhi received a cold shoulder from Washington DC on its request for exempting India from the higher tariffs announced by the US on steel and aluminium imports. "Our estimates place a combined $240 million loss for India on account of Mr. Trump's steel, aluminium tariffs and we felt a reciprocal tariff of a similar amount on US imports would be fair," a senior Commerce Ministry official said.
He added that the list was prepared keeping in mind the relentless attacks by the US in certain sectors. As a result, motorcycles above 800 cc have been kept in it despite having only small amount of trade since Trump has used Harley Davidson bikes as an instrument to attack India on alleged market access issues. On the other hand, repeated calls by US-based trade bodies to penalise Indian exports of lobsters may have been the reason behind American Brine Shrimps finding its way into the list of tariff hikes.
With the revised duties coming into force from June 21, the pressure is now on the US, which under President Donald Trump, has taken a belligerent stance on trade with major partners. On Saturday, China also announced higher tariffs on $34 billion worth of American agriculture and automobile exports.
ADVERTISING
ALSO READ: India takes US steel tariffs complaint to World Trade Organization
For a number of the items on which India has decided to hike duties, the United States is the largest seller to India such as for artemia shrimp, almonds and apples. "Such sudden decisions obviously affect the long-term planning as well as profit margin of businesses. The government should stick to whatever policy decision they take for at least one production season so that the industry has time to adjust itself. Although domestic production has picked up in recent years, local supply is nowhere near fulfilling the current demand." Kartik Jalan, CEO of Kailash Agro said.
Industry insiders also pointed out that dry fruits imports from the US have continued to strengthen over the past few years and the strong industry associations based in the US will not easily let go off a huge market such as India.
India's move comes at a time when it is bilaterally trying to negotiate several trade issues such as market access and tariff hikes. Days after a visit to Washington DC, Commerce and Industry Minister Suresh Prabhu on Friday said that senior officials from both sides will meet before the end of the month to discuss trade issues.
Trump’s argument that US exports are facing higher tariffs while it allows imports at lower duties led to executive decisions earlier this year levying an additional tariff of 25 per cent on steel and 10 per cent on aluminium imported from all countries. India’s steel shipments to the US are about 3 per cent and aluminium exports are slightly higher than 14 per cent of total outbound shipments of both products.
ALSO READ: Why Trump's zeal for tariffs is yet to derail global economic outlook
Interestingly, India had termed the move 'unilateral and unfair', dragging the US to the World Trade Organisation’s dispute settlement body. After that, India had last month informed the WTO that it intended to impose higher tariffs on 20 items. The latest communication to the WTO has revised the product list as well as what we estimate to be the hit to India, the official said.
"I strongly feel that if you do not respond adequately, you cant get someone to come to the negotiating table. For Trump, everything is like a business deal. The US hasn't respected the multilateral system recently but if it feels the tariffs are unjust then they should go to the WTO." Biswajit Dhar, Trade Expert and Professor at the Jawaharlal Nehru University said.
This has been a week of tariff hikes by nations. European Union nations on Thursday approved a raft of tariffs targeting US goods including whiskey, blue jeans and motorcycles in retaliation against duties imposed by Trump on European metal exports. The European countermeasures target $3.3 billion of American imports.
A day later, the United States Trade Representative announced that the US will initially impose an additional 25 per cent tariff on 818 Chinese imports worth about $34 billion beginning July 6.
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