Tariff relief for India, but US has upper hand in trade deal

INDIA has heaved a huge sigh of relief as the US has slashed tariffs from a crippling 50 per cent to a manageable 18 per cent. This is good news for labour-intensive sectors such as gems, jewellery, textiles and apparel, which have been struggling ever since US President Donald Trump upped the tariff ante in August last year. However, the long-delayed trade deal worked out by the two countries seems to be loaded in America’s favour, even as its fine print is awaited. India will increase purchases of US petroleum, defence equipment, electronics, pharmaceuticals, telecom products and aircraft. This is in sync with Trump’s push to reduce the trade deficit and deny India an “unfair” advantage.

It’s apparent that Trump has prevailed upon India to stop buying Russian oil — the phase-out will take months — and lower trade barriers. The writing was on the wall when Indian refiners started reducing purchases from Russia and stepped up imports from West Asia, Africa and South America. What has set alarm bells ringing is US Agriculture Secretary Brooke Rollins’ statement that the trade deal will boost American farm exports to India, lifting prices and “pumping cash into rural America”. The all-important question is: will the Modi government be able to protect the interests of domestic farmers while opening India’s markets to US products in the dairy and agriculture sectors?

The US President’s “my way or the highway” approach has prompted New Delhi to make a slew of concessions and compromises. The US continues to hold most of the aces on the trade front, raising doubts about India’s ability to strike a hard bargain and assert strategic autonomy. On the bright side, India’s export competitors such as Indonesia, Vietnam and Bangladesh are being charged higher tariffs by the US. However, there are telltale signs that Delhi might have missed a golden opportunity to outtrump Trump.