NEW DELHI: India is evaluating multiple options to cope with the Trump 2.0 administration’s imminent tariff policies, including a truncated bilateral trade deal, and sector-specific give-and-take arrangements, official sources said here on Wednesday, requesting anonymity. The sources, however, maintained that no action plan has been firmed up yet. Decisions would be taken at the appropriate time, they said, adding that these would be fully on a transactional basis.
While President Trump persisted with its aggressive stance on Tuesday, by announcing a 10% tariff on China, government functionaries here saw “positives” in the America First Trade Policy Memorandum issued by him. The document, they noted, laid emphasis on bilateral trade agreements, which India could take advantage of.
The trade memorandum authorises the US Trade Representative (USTR) to identify countries with which the world’s largest economy can negotiate agreements on a bilateral or sector-specific basis, to obtain export markets. India and US had in earlier Trump presidency too discussed truncated trade deals.
“The ministry of commerce is speaking to and consulting various ministries on the emerging situation. The ministries will have to evaluate possible actions. They will then put their minds together. We will wait for any action or signal (from the US),” an official said. India will prefer to wait and do the groundwork and act when there is a need for action,” the person added.
The US memorandum asks the departments of the administration dealing with trade and finance to investigate and remedy persistent trade deficits and address other countries’ unfair trade practices. The departments have been given two and half months for the study.
According to the sources, the government is also awaiting confirmation of key trade officials in the US. “Confirmations will take a bit of time. Once these happen there will be discussions. India and the US are strong trading partners. There will be engagement and then we will decide what course to take,” the official quoted above added.
While President Trump has announced 25% tariffs on Canada and Mexico and 10% on China, for the rest of the world he has talked of a universal tariff. India hasn’t yet found a mention in his tariff announcements, except indirectly in his statement regarding BRICS. He has threatened the members of BRICS with 100% tariffs if they go ahead and launch a separate currency that bypasses and undermines the US dollar.
Another senior official clarified that there are no plans for any BRICS currency, and India is rather working on use of rupee in bilateral trade. India is pushing for use of the rupee in bilateral trade with several countries to reduce exchange rate risk, the official added.
Trade experts are also of the view that India should not be making unilateral offers. “The issue is not what India can offer but what the US wants,” international trade expert Abhijit Das said. He said if the US goes ahead with any additional tariffs then India should not hesitate to retaliate otherwise it will not have any leverage to negotiate left. “India should be geting something in return.”
The sectors where the US might be interested in greater market access in agriculture products like apples, wheat, whiskey and wines, automobiles and motorcycles, electronics and computers, petroleum crude among others.
India had a merchandise trade surplus of over $35.3 billion with the US in FY24.
Source: The Financial Express