India increases tariffs on 28 US goods in latest Trump trade dispute

India slaps higher retaliatory tariffs on US goods after the US ends a trade privilege for India.

India recently increased tariffs on 28 US goods. According to the World Trade Organisation, India could be placing $241 million worth of tariffs on US products.

US-India trade impasse details

India is raising tariffs on US goods in response to US President, Donald Trump, ending trade privileges for the Asian nation under the Generalised System of Preferences [GSP]. India was the biggest beneficiary of that system meant to boost trade. The system allowed duty-free exports of up to $5.6 billion from India to the US.

The US Trade Representative’s office agreed with Trump that India didn’t meet the criteria to continue to benefit from the GSP.

‘India has implemented a wide array of trade barriers that create serious negative effects on United States commerce. Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion,’ said the US Trade Representative’s office.

India retaliated by increasing tariffs on mostly agricultural products and some chemicals. US apples will be hit with a 70% tariff.

How will tariffs affect US-India relations?

The US is already locked in a trade war with China. Now this latest tariff dispute could impact trade relations with Asia’s second largest nation. Rajat Kathuria, director of the Indian Council for Research on International Economic Relations, said India is asserting its strength with increased tariffs against the US.

‘I think it's [the tariff action] a signal that is going out from India that we are going to act, if not tough, we're going to be firm in our response,’ said Kathuria.

Siddhartha Khemka, head of retail research at Motilal Oswal Securities, says that the increased tariffs could worsen trade relations between India and the US.

‘India putting retaliatory tariffs on [the] US is leading to a fear that it might escalate into a trade war between the two countries,’ said Khemka.

Mike Pompeo, US Secretary of State, and Subrahmanyam Jaishankar, Minister of External Affairs in the Government of India, are scheduled to meet later this month. Manym will be watching the meeting to see if this latest trade impasse can be resolved.

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