India Joins the Trade War

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India got into the ongoing trade war between the United States and China. India set to impose a tax on aluminum and steel that is being imported from the United States. Such moves would make the United States retaliate with targeted retaliation actions. Some of the exports that may face sanctions include medicine, diamonds, and car auto parts. Moreover, the U.S. is pressuring New Delhi to open its agricultural industry, which is risky for Prime Minister Narendra Modi’s bid for re-election. New Delhi imposed tariffs on commodities like almonds, apples, and walnuts. On August 4, such duties would take effect, and they will be worth $241 million.

However, Prime Minister Narendra Modi claimed that they would delay the taxes until next month with negotiations with U.S. officials still going on. Moreover, if the two countries cannot close a deal, then India will have to push forward with their tariffs. The United States, on the other hand, will respond to similar actions as it did with China. Analysts add that if such situations happen, then the re-election of Prime Minister Modi would be detrimental. Furthermore, if the White House considers banning India’s most significant exports to the United States, it could be a risky political affair for Modi. Such commodities include medicine, auto parts, diamonds, and seafood.

The United States could also pressure the improvisation of agricultural and dairy ventures that are politically sensitive considering the rural areas. The United States is known for imposing high taxes on agricultural commodities to protect the local farmers. Also, recent prolonged droughts and moderate prices for basic commodities have catapulted a hike in duties on Indian imports. As from February, the Indian government doubled the taxes for sugar to 100 percent as chickpeas witnessed an upsurge of 40 percent. The United States had urged India to reduce their tariffs on agricultural products.

However, India is playing a tit-for-tat game with the United States. Washington has since seen a fresh opportunity to counter the taxes. As for India, it has advantages over the United States when it comes to Information technology. Nonetheless, its service exports are under threat as the Trump administration tightens the H- 1 B visa regulations. Millions of Indian IT professionals have jobs in the United States via the H-1B visa, and stringent measures could limit the number of users living in the United States. As such strict rules and regulations take effect, the Indian administration hopes no more tariffs will be imposed.

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