New Delhi: US President Donald Trump has given 90 days to implement new tariff rates on goods imported from China, while 25% tariff has already been implemented on products coming from India.
In case of no agreement, 50% tariff will be implemented on India with immediate effect from 27 August, which will be the highest in the whole world.
According to American media and strategic experts, this step is not only an attempt to strike an economic but also a political and diplomatic balance. According to a senior official of the US Trade Representative Office (USTR), trade talks with China are in the final stage and 90 days have been given to both the parties to reach a mutual agreement.
US trade deficit with India is not as big as with China
America wants China to give concessions in intellectual property, technology transfer and agricultural imports. This means that the Trump administration wants to keep the possibility of a deal with China open so that instead of confrontation, political benefits can be taken in exchange for concessions. According to a report in The Wall Street Journal, the US trade deficit with India is not as big as with China, but the Trump administration considers it a move with less political risk. Imposing tariffs on India will send a message to US industries that the administration is serious about protectionism, while there will be time left for bargaining with China.
Offering Chinese goods as a cheaper alternative to consumers
According to experts, India does not have as aggressive a counter-attacking capability as China and its dependence on the US market is high, so it was easy to impose tariffs immediately. Milani Verma, a senior researcher at the Carnegie Endowment for International Peace, believes this notion to be partially correct. She says that the goal of the Trump administration is that US consumers continue to buy Chinese goods as a cheaper alternative until domestic production increases.
Time to China, strategic message
According to Edward Alden, economist at the Bookings Institution, immediate tariffs on India and giving time to China is America’s ‘dual track’. On the one hand, taking concessions from China, on the other hand, sending a strong message to India that access to the US market will now depend on political bargainers. This strategy could also impact America’s Asia-Pacific economic equation, where India is already a major force.