Days before Lok Sabha polls, Donald Trump decides to end preferential treatment for India from $5.6bn tariff deal

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In a setback to India, US President Donald Trump has decided to end preferential trade treatment for India, which allowed $5.6bn worth duty-free entry for the country’s exports to the United States.

Donald Trump
File Photo: REUTERS

Donald Trump, according to a report by Reuters, wrote in a letter to congressional leaders, “I am taking this step because, after intensive engagement between the United States and the government of India, I have determined that India has not assured the United States that it will provide equitable and reasonable access to the markets of India.”

This follows the US Trade Representative’s Office recently accusing India of bringing in a ‘wide array of trade barriers that create serious negative effects on United States commerce.’

Trump has repeatedly called out India for its high tarrifs. In January this year, he had slammed India for 150% tariff on imported whiskey. More recently over the last weekend, he lashed out at India calling it a ‘high-tariff’ country.

Trump’s latest plan will mean taking India out of the preferential trade programme, which is also known as the Generalized System of Preferences. The GSP lowers US duties on exports from 121 developing countries. India, according to a report by CNN, was the biggest beneficiary of the programme in 2017, with exemptions on goods worth $5.6 billion.

One of the reasons why the trade ties between India and the US has gained intensity in the recent months is because Trumps’ ‘Buy American, Hire American’ plan directly clashed with Modi’s ‘Make in India’ campaign.

The news of the US removal of preferential treatment for India comes just days before Prime Minister Narendra Modi seeks a second term in office. With his domestic economy in poor health, the news from the US is bound to give fresh ammunition to the Congress-led opposition to attack the government.

This year’s Lok Sabha polls are likely to be held in April and May this year.

 

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