US President Donald Trump announced that his country would end the preferential trade treatment on June 5. India’s Finance Ministry responded June 15 that tariffs on several US products will come into force the next day, with some as high as 120 percent
The Beijing News.
Different from China and Japan who all run a trade surplus with the US, India had a trade deficit with the US in 2018. Data from the US shows that of the US$142 billion worth of trade between them in 2018, Indian exports to the US stood at around US$55 billion.
Trump apparently has other considerations in starting the spat with India, Tao Duanfang, a columnist, wrote for the newspaper The Beijing News. One of Trump’s top priorities is re-election in 2020, Tao noted. Maintaining “America First” in trade is key to guaranteeing his appeal to his die-hard supporters and winning high approval ratings.
Diplomatic and international strategies have not been highlights for the Trump administration and Trump could even dismiss strategies like “Indo-Pacific” that are unlikely to deliver short-term results and not cost effective.
While not taking notice of India amid his trade wars with other countries, Trump will quickly turn to India once he scores a win or suffers a setback or lack of progress on other fronts, Tao said. Trump has long been unsatisfied with “India dumping cheap generic drugs in the US,” and believes that he can pressure India to compromise.
Modi does not have much room to back down in the face of American pressure, because he won his re-election by whipping up Indian nationalism since late last year. Given India is a country with high national pride, conceding to the US now will cost the Modi government dearly.
That said, the two sides have room for talks. Some observers noted that India pulled artemia shrimp from its tariff list, and US Secretary of State Mike Pompeo said they could talk it through. Pompeo will visit India in a few days, and both Trump and Modi will attend the G20 summit in Japan. Yet Trump will undoubtedly choose America First over the Indo-Pacific Strategy, Tao said.
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