India-US Trade Stand-off: Navigating Tariffs and Geopolitical Pressures
UPSC Relevance
Prelims: International Relations (India-US relations), Indian Economy (Foreign Trade, Tariffs, Non-tariff barriers, World Trade Organization - WTO).
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
US President Donald Trump announced that a 25% tariff will be imposed on imports from India starting August 1. In addition, there will be a "penalty".
Trump cited the following reasons:
India's energy and military deals with Russia.
India's high tariffs and non-tariff barriers.
This announcement came amidst ongoing discussions between India and the US for a Bilateral Trade Agreement (BTA).
These tariffs will create a relative disadvantage for India in the US market compared to its competitors like Vietnam, Korea, and Indonesia.
In trade talks, India's attempt to ring-fence strategic sectors such as agriculture and dairy products was a point of contention.
India responded by stating that with whom to trade is India's sovereign matter, and all steps will be taken to protect the national interest.
India has informed the World Trade Organization (WTO) that it has the right to impose retaliatory tariffs against this action by the US.
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