Trade War begins between India and U.S. with India Raising Tariffs on U.S. Imports

With the Trump government facing flak from majority of economies for slapping tariff hikes on steel and aluminium imports announced in the month of Mar’18, India has also decided to retaliate with increase in import duties on 30 products coming from U.S. This list of products include motorcycles, iron and steel products, almonds, and apples among others.

India is miffed with the fact that duty has been imposed by Trump government on Indian steel imports despite India having percentage share as low as 2% in U.S. total steel imports. The duty imposed by U.S. has affected Indian steel exports by USD 198.6 million and aluminium exports by USD 42.4 million and with this hike in import duty on U.S. imports, India expects to collect a duty of around USD 239.08 million.

This will reportedly be the first time that India has imposed retaliatory import duties. The higher revised import duties will be put into effect from 21 Jun’18.

Although this is a small amount in relation to U.S. exports of over USD 1.5 trillion, it is still a noticeable number because it occurs along with retaliatory tariffs on U.S. imports by other major economies like China, the European Union (EU) and the U.S.’ NAFTA (North American Free Trade Agreement) partners, Canada and Mexico.

Last week China has decided to impose additional tariffs on imports from the US worth USD 50 billion. The EU is right now proposing additional tariffs on US imports worth a modest USD 4.5 billion.

The additional duty proposed to be hiked by India on 30 U.S. items ranges from 10% to 50%. India’s actions are expected to have the maximum impact on almonds (USD 116 million) followed by apples (USD 24 million) and phosphoric acid (USD 14 million).

But the real impact will be on products such as motorcycles over 800 cc – a move targeted at Harley-Davidson – where an additional duty of 50% has been proposed. This is seen as a real counter to President Donald Trump who had demanded a reduction in tariff on the cult bike brand.

India has also dragged the U.S. to the WTO’s (World Trade Organisation) dispute settlement mechanism over the imposition of import duties on steel and aluminum.