India-US Trade Conflict: Tariffs, Geopolitics, and Strategic Challenges
UPSC Relevance
Prelims: International Relations (India-US relations), Indian Economy (Foreign Trade, Tariffs, Free Trade Agreements - FTAs/Bilateral Trade Agreements - BTAs).
Mains:
GS Paper 2: Effect of policies and politics of developed countries on India’s interests; Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
GS Paper 3: Indian Economy and issues relating to planning, mobilization of resources, growth.
Key Highlights from the News
American President Donald Trump announced that a 25% tariff would be imposed on imports from India starting August 1. In addition, there will be a "penalty."
Trump cited India's energy and military deals with Russia, India's high tariffs, and non-tariff trade barriers as reasons for this decision.
This decision comes amid ongoing negotiations between the two countries for a Bilateral Trade Agreement (BTA).
In trade talks, while India sought to ring-fence key sectors like agricultural and dairy products, the US demanded access to all sectors.
India responded by stating that deciding who to trade with is a sovereign matter for India, and that all measures would be taken to protect the national interest.
These tariffs will create a relative disadvantage for India in the US market compared to its competitors like South Korea, Vietnam, and Malaysia.
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