Former US President Donald Trump has expressed strong views on protectionism, highlighting his potential use of high tariffs on Indian imports by labeling India as a significant abuser of trade relations with the United States. This assertion has reignited discussions on the trade dynamics between the two countries, with Trump emphasizing the need for reciprocal trade policies and the imposition of tariffs aligned with those charged by other nations if he were to be re-elected in the upcoming US Presidential elections.
The possibility of elevated tariffs imposed by the US poses a significant challenge for India, especially considering the subdued export demand experienced over recent months amid the global economic downturn. Notably, the United States stands as India's primary export partner, with total exports amounting to $77.5 billion in the fiscal year 2024, underscoring the importance of smooth trade relations between the two nations. Despite China holding the position of India's top trading partner in the previous fiscal year, a report by the Global Trade Research Initiative revealed that the United States claimed the top spot in trade relations with India from January to June 2024, showcasing a 5.3% increase in total trade value.
In efforts to strengthen their trade ties, India and the US have engaged in resolving disputes and issues bilaterally as well as at the World Trade Organization. Recent developments include the mutual agreement between both nations announced in March this year, where a resolution was submitted to the WTO’s Dispute Settlement Body concerning India's measures on certain agricultural product imports. Additionally, India's reduction of import duties on specific food items, aligning with agreements made in September 2023 to resolve long-standing disputes with the US, emphasizes the ongoing efforts to foster smoother trade relations. Despite these positive strides, concerns have arisen, such as India's abrupt ban on non-white basmati rice exports leading to panic buying in the US, and the imposition of a laptop import licensing policy sparking worries among nations like Japan, China, and the US, raised by US Trade Representative Katherine Tai.