While the high stakes trade war with China continues, the United States’ much sterner stance with regards to trade with another giant economy has gone under the radar a bit. Ever since Donald Trump took office as President, he has been adamant about correction the trade imbalance and China and India have been two nations who have been within his focus. Back in March, the United States announced that the Generalised System of Preferences (GSP) that allowed certain nations to trade on favorable terms was being removed for India. The GSP allowed imports to the US from India to the tune of $5.6 billion a year without any duties, and there is no doubt it is going to pose a problem for most Indian exporters.
However, the United States Secretary of Commerce, Wilburn Ross, who is currently visiting India, told a news network in India that the country’s policymakers should not go for retaliatory duties or else there would be consequences. He said, “Any time a government makes a decision adverse to another one, you will have to anticipate there could be consequences. We don’t believe under the WTO rules that retaliation by India would be appropriate.” This is a particularly telling warning the US because there were whispers right after the GSP move in March that India could go for the retaliatory measure. In addition to that, the US is the nation’s biggest trading partner, and perhaps it would not be the most prudent thing to pick a fight over a special provision that seems paltry in the larger scheme of total yearly trade.
The US is currently embroiled in a trade war in China, and after months of trade talks, no resolution has yet come to pass over the new ground rules. After China tried to renegotiate certain provisions of the new trade deal, the US decided to raise tariffs on $200 billion worth of Chinese goods by as much as 25% and Donald Trump has promised more tariff hikes soon on $325 billion worth of goods from China. Ross is also going to take up the issue of new e-commerce regulatory measures in India that seems to have affected American companies like Amazon and Walmart quite adversely. He called the rules discriminatory. While speaking to the news network, he said, “But there’s a limit to how far the discriminatory behavior can go. And our job is to try to get a level, more level playing field.”