Tariff war has become the hot topic of the day during Trump’s second term. But it was also a hot topic during his first term.
While the ensuing days will be full of analysis and suggestions on Tariffs, let us quickly go down the memory lane and see what happened between the US and India on Tariffs during Trump’s first term. This has been best analysed in my study for India Exim Bank
Tariff Escalations between US and India
The simmering trade tensions between India and USA came to the open in 2018 and 2019 when two policies of the US triggered the Indo-US trade conflict.
These actions met with counter action from India in the form of Retaliatory Tariffs on US imports by India in June 2019. These actions and counter actions have far reaching consequences on Indo-US Trade.
US Tariff escalations on India
On March 23, 2018, US imposed global tariffs on steel imports of 25% and additional tariffs on Aluminum imports of 10% under Section 232 of US Trade Expansion Act 1962. We have termed this development as 1st phase of tariff escalations. These two measures have affected countries like India and China.
The 2nd phase of tariff escalation between India and US which was more direct on India, was when GSP benefits were withdrawn from India on June 5, 2019. As a result of this action not only did India have to pay MFN tariffs for these items, but also had to pay 25 % duty on Solar Cells which India was exempted from as long as it was a GSP beneficiary. In fact on January 23, 2018, US 201 of Trade Act, 1974 was invoked by US as a trade remedy measure on Solar Cells Panels and Washing machines parts and the President issued the Presidential Proclamation 9693 and Presidential Proclamation 9694 imposing tariff rate quotas and increased duties on imports of solar cells and panels, and washing machines and parts, effective February 7, 2018. These measures have a duration of four years for solar cells and panels, and three years for washing machines and parts. These measures cover imports from all countries, except certain developing countries including GSP beneficiary countries like India. The US withdrawal of GSP benefits from India triggered the tariff measures imposed on Solar Cells and Panels which were now also applicable to India. India is not a major exporter of Washing machines, parts to US. So, the impact was only on Solar Cells.
