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| US President-elect Donald Trump | Photo: Instagram |
US President-elect Donald Trump has once again warned India against imposing tariffs on US goods. The bilateral trade dispute between India and the US has come to the fore again in his latest remarks. A few days ago, Trump described India as a "big abuser" of tariffs.
On Monday, Donald Trump reiterated that he would impose retaliatory tariffs if India continued to impose tariffs on US goods. He said, "If they impose tariffs, we will impose the same amount of tariffs. Let them impose tariffs, we will impose tariffs and they are imposing tariffs on us in almost every way. But we have not imposed tariffs yet."
According to a report by the Indian media outlet Economic Times, Trump's main idea in terms of trade with different countries is to maintain a kind of equality. When he served as the US president for the first time from 2017 to 2021, he promoted the strategy and policy.
India is known internationally for its protectionist trade policies. India has been criticized in the past for imposing high tariffs on US goods. In his latest remarks, Trump specifically mentioned India and Brazil. He said, "The word reciprocity is important. If India imposes 100 percent tariffs, will we impose nothing?"
Donald Trump has previously described India as the 'tariff king'. He cited the high tariffs India imposes on imports of Harley-Davidson motorcycles. Although India has since reduced the tariffs, Trump remains critical. He said, 'India charges too many tariffs.'
Tensions between Trump and India over tariffs
The strategic relationship between India and the United States has strengthened during Trump's first term as president. But trade relations between the two countries have occasionally stumbled. After India raised tariffs on steel and aluminum imports in 2019, Trump imposed retaliatory tariffs on several U.S. products. In retaliation, Trump withdrew special trade privileges granted to India under the Generalized System of Preferences (GSP).
There is a large volume of trade between the two countries. In 2023-24, India's imports from the US were $42.2 billion. On the other hand, exports were worth $77.52 billion. The US is the largest destination for Indian exports. The cancellation of GSP has affected Indian exports. If exports are further hampered, Indian industries like IT, pharmaceuticals and apparel will face problems.
What could happen in Trump's second term?
The policies that the Trump administration will implement after taking office are expected to be based primarily on US interests. In that case, Washington will pressure India to remove trade barriers. Howard Lutnick, whom Trump has nominated as Secretary of Commerce, said, "You can expect us to treat you the way you treat us."
This strategy can create challenges for India, but it can also bring opportunities. For example, if the US increases tariffs on Chinese goods, Indian exporters can take advantage of that. Earlier, India benefited from the US trade war with China. US companies increased imports from India as an alternative to Chinese products.
However, Trump's announcement of 'retaliatory' tariffs could put India in danger. This would reduce India's ability to compete in the US market. It would create problems especially for the IT and garment sectors, because these two industries are heavily dependent on US buyers. At the same time, US investment in India could decrease, which would be negative for the Indian economy.