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India drawn in to US trade war

India drawn in to US trade war

(14 June 2019 - India) India will impose higher retaliatory tariffs on 28 US products including almonds, apples and walnuts following President Trump’s withdrawal of key trade privileges for India.

The US scrapped trade privileges under the Generalized System of Preferences (GSP) for India, the biggest beneficiary of a scheme that allowed duty-free exports of up to US$5.6 billion.

India described the decision as “unfortunate” and decreed to uphold its national interests. New Delhi’s new rules in areas such as eCommerce and data localization have already frustrated the US and impacted Amazon, Walmart, Mastercard and Visa. It is reported that India may accrue up to US$217 million additional revenue from retaliatory tariffs on items imported from the US.

India initially issued an order in June last year to raise taxes as high as 120 percent on selected US imports, incensed by Washington’s refusal to exempt it from higher steel and aluminium tariffs. But New Delhi repeatedly delayed raising tariffs as the two nations engaged in trade talks covering US$142 billion worth of goods last year.

Director of the Institute of South Asian Studies at the National University of Singapore, C Raja Mohan, said "It is now a question of finding the middle ground. If you are a pessimist, this is the beginning of a trade war between India and the US. If you are an optimist, India’s tariff retaliation sets the stage for a serious negotiation between Delhi and Washington on trade issues and a new framework to transform the commercial partnership and reinforce the security ties. Pompeo’s talk in Delhi and Modi’s visit to the Osaka G20 should tell us who might prevail: pessimists or optimists.”

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