Amidst ongoing trade negotiations between the United States and India, US President Donald Trump has expressed his frustration with the pace of progress. According to a White House aide, Trump believes that the recently imposed 25% tariff on Indian goods will serve as a remedy to the situation.
Kevin Hassett, Director of the National Economic Council, indicated that Trump is not pleased with the current state of trade discussions with India. Hassett stated that Trump "feels that a 25 percent tariff will address and remedy the situation in a way that's good for the American people". The tariff, which went into effect on August 1, is viewed by some as a pressure tactic to encourage New Delhi to meet Washington's demands.
Trump himself has voiced his concerns on social media, stating that the U.S. has a significant trade deficit with India. He also criticized India for purchasing a large portion of its military equipment and energy from Russia. Trump stated, "Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country".
The announcement of the tariffs has been met with disappointment from some quarters. The Federation of Indian Chambers of Commerce and Industry (FICCI) expressed its hope that the higher tariffs would be a short-term measure and that a permanent trade deal could be finalized soon. The Indian government has acknowledged Trump's statement and is currently studying its implications. The Ministry of Commerce and Industry has reiterated its commitment to securing a fair, balanced, and mutually beneficial bilateral trade agreement, while also emphasizing the importance of protecting the interests of Indian farmers, entrepreneurs, and MSMEs.
Several rounds of trade talks have taken place between India and the U.S. in recent months. While there was optimism that a deal could be reached, key points of contention remain. These include U.S. demands for greater access to Indian agricultural markets, particularly for dairy and genetically modified products, which India has resisted due to concerns about the impact on its farmers.
Nisha Biswal, Partner at the Asia Group and former US Assistant Secretary of State for South and Central Asia, suggested that the current impasse is "less about substance and more about tactics". She noted that the U.S. is employing hardball tactics despite an ambitious deal already being on the table.
The imposition of tariffs and the ongoing trade negotiations have the potential to impact both the Indian and U.S. economies. Experts suggest that delays in finalizing a trade deal could negatively affect the Indian economy and stock market. However, some also believe that a trade deal is crucial for the U.S. due to geopolitical considerations.
The situation remains fluid, and it is unclear whether the imposition of tariffs will ultimately lead to a breakthrough in trade negotiations or further escalate tensions between the two countries.
