INDIA-US TRADE AGREEMENT AND TRUMP ADMINISTRATION 25% TARIFF POLICY

INDIA-US TRADE AGREEMENT AND TRUMP ADMINISTRATION 25% TARIFF POLICY

6-AUG-ENG 24

RAJIV NAYAN AGRAWAL

ARA------------------------The trade relationship between India and the US has long been strategically and economically strong. The two countries have cooperated with each other on various global forums, but tensions on the trade front increased after Donald Trump became president. The Trump administration imposed heavy import duties (tariffs) on many countries including India under the policy of "America First". Especially, tariffs of up to 25% and 10% were imposed on steel and aluminum products coming from India.

In addition, the US also ended the GSP (Generalized System of Preferences) status given to India, which ended the exemption that India used to get to export up to $ 5.6 billion to the US without duty. This was a big blow to India's small and medium enterprises.

Trade between India and the US has reached around $ 135 billion by 2024, and this figure is growing rapidly. India is the ninth largest trading partner of the US, while the US has become India's largest export destination. About 17% of India's total exports go to the US alone.

India exports textiles, chemicals, pharmaceuticals, gems and jewellery, steel, organic chemicals, agricultural products, and IT services to the US. India imports aviation equipment, defence technology, petroleum products, medical equipment, and electronics from the US.

Donald Trump had argued that increasing duties on imports from foreign countries is necessary to reduce the US trade deficit. This policy had a direct impact on India. The US market became expensive for Indian steel and aluminium companies. This reduced the export of these products from India and strained economic relations with a strategic partner like the US.

The removal of GSP affected Indian products that were exported to the US without duty, such as textiles, handicrafts, organic chemicals and leather products. This affected the livelihood of thousands of small businesses and lakhs of artisans in India.

India responded to US decisions with restraint and national pride. The Indian government imposed retaliatory duties on 28 products imported from the US, including products such as apples, almonds, walnuts, motorcycles and bourbon whiskey. At the same time, India challenged the US tariff policy in the WTO (World Trade Organization), calling it unfair and against WTO rules.

India made a major change in its trade approach and pursued the policy of "Atmanirbhar Bharat" and took steps to promote domestic industries, startups and MSMEs.

US companies like Apple, Google, Meta (Facebook), Amazon and Microsoft do business worth billions of dollars in India. But when the Indian government started tightening digital data security, localization, and e-commerce rules, the US started exerting indirect pressure.

India wants the data of its citizens to be kept safe within the country, and foreign companies should fully comply with the laws of the country. But the US tech lobby wants India to relax these rules so that they can gain more control and profit.

India has made it clear that there will be no compromise on digital sovereignty, data security, and consumer rights. Even if it is the world's largest companies.

Prime Minister Narendra Modi has indicated through slogans like "Bharat First" and "Vocal for Local" that India will now adopt a self-reliant and self-respecting approach in business matters as well. Efforts are on to improve trade relations with the US, but not at any cost.

India should take some major steps in this direction:

1. There should be a new, balanced and transparent trade agreement between India and the US that respects India's sensitivities, domestic employment, and digital sovereignty.

2. If schemes like GSP are to be reinstated, India should ensure that its benefits not only go to the US, but also to India's farmers, artisans, and small entrepreneurs.

3. If US tech companies want to work in India, they will have to adapt to Indian rules. There should be no relaxation in data security, tax system, and competition rules.

4. India should strengthen its technological and industrial ecosystem so that it does not have to succumb to the pressure of the US or any other country.

5. India should emerge as the voice of developing countries on global platforms. India should oppose the US pressure tactics on platforms such as WTO, G20, BRICS and ASEAN.

India-US trade relations are important, but these relations cannot be one-sided. India is no longer just an emerging economy, but a decisive power that is soon going to become the third largest economy in the world.

Trump's tariff policy and steps like ending GSP have forced India to think that mere compromise is not the solution, but it is important to protect its interests and become self-reliant.

Now the time has come for India to send a message to the whole world that it wants partnership, not subordination. Self-respect cannot be mortgaged for trade benefits.

“India will trade — but on its own terms, with self-respect and keeping national interest paramount.”

This is the beginning of a new India where trade agreements will also be a part of nation building.