Sore over ‘high tariffs’, Donald Trump wants to end preferential trade treatment to India

• In a letter to the US Congress sent yesterday, Trump outlined plans to end India’s trade benefits under the Generalised System of Preferences (GSP) programme.
  
• This is largely due to the India’s “high tariffs” and its supposed failure to provide fair access to its markets.
  
• India's commerce secretary Anup Wadhawan said the damage would be minimal, impacting only $190 million worth of trade benefits.

As the US government and China near a compromise on their trade conflict, it seems that another country has come in President Donald Trump’s line of fire.

In a letter to the US Congress sent yesterday, Trump outlined plans to end India’s trade benefits under the Generalised System of Preferences (GSP) programme. This is largely due to the India’s “high tariffs” and its supposed failure to provide fair access to its markets, according to media reports.

The imposition of duties will curtail Indian exports, which the Trump administration hopes will reduce its trade deficit with the country - which totalled around $27.3 billion in 2017, as per data from the US Trade Representative’s Office.

If the US legislature follows through with the proposal, around $5.6 billion worth of Indian exports -- that are currently exempt from duties -- could be impacted. The GSP is a trade programme aimed at allowing duty-free access to developing nations on certain goods.

However, ending the preferential treatment won’t be immediate. It takes around 60 days for the removal from the GSP to take effect, and can only be enforced through a Presidential proclamation, giving the US and Indian trade officials time to reach a solution.

The move could also just be a scare tactic to pressure India to cutting its tariffs. However, India's commerce secretary Anup Wadhawan said the damage would be minimal, impacting only $190 million worth of trade benefits.

India is said to be the largest beneficiary of the GSP programme. The Trump administration began a review of India’s eligibility for the programme in April last year. Trump had earlier criticised India’s imposition of a 100% duty on Harley-Davidson motorcycles, causing India to lower the tariff on high-end motorcycles to 50%.

In the same letter, Trump also proposed to revoke preferential trade treatment to Turkey, owing to the country’s progress on a variety of economic indicators in the past 45 years such as Gross National Income per capita and export diversification.


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