 "Modi-Trump meet: India to cite duty cuts in Budget to avert tariff war with US")
As President Trump issued new threats of 25% tariffs on all steel and aluminium imports into the US (on top of existing metal duties), India is preparing to unbracket itself from countries he has labelled as “worst tariff manipulators,” citing recent duty cuts to demonstrate a reduction in average duties in recent years.
On Monday, Trump’s economic advisor Kevin Hassett stated that India had high tariffs that prevent imports, and that Modi and Trump will have a “lot to discuss” when they meet later this week.
Following Budget announcements on tariff cuts for motorcycles, including the iconic Harley Davidson, and other products in the run-up to PM Modi’s meeting with Trump, officials said they have prepared the ground for the PM to tell Trump that his government is sensitive to the White House’s concerns and has conducted a comprehensive review of tariffs to bring them down to Asean rates.
They also stated that the lowering sent a signal to the globe that tariff rates were not as exorbitant as some trading partners believed.
The cut in the Union Budget is anticipated to have reduced the average tariff by one percentage point to 10.6%.
Average tariffs on imports from the United States have likewise decreased over time.
According to authorities, the duty on the top 30 US imports, which include oil, gas, diamonds, and aeroplanes, would rise to no more than 7.5%.
Officials are also banking on the US’ strategic need for excellent strategic relations with India, implying that Trump may not cross New Delhi’s pain threshold.
Impact Shorts
More ShortsThough Modi and Trump have had a strong relationship since the latter’s first term, the government understands that nothing can be taken for granted when dealing with a US president who regards himself as a transactionalist with unrivalled capacity to obtain the best deals for the US.
While the planned 25% tax on steel and aluminium has sparked global concern, it is unlikely to have a substantial impact on India’s sales to the United States. India’s iron and steel exports were anticipated to be $475 million previous fiscal year, with iron and steel products accounting for an additional $2.8 billion.
In 2023-24, the export of aluminium and its products was expected to be little less than $950 million.
In 2018, the previous Trump administration placed 25% tariffs on steel and 10% on aluminium, claiming national security concerns.
These tariffs applied to main steel items, excluding stainless steel, and comprised steel pipes and tubes. Tariffs were imposed on most nations, resulting in a wave of retaliation and rising global trade tensions.
American automakers had likewise reduced output as a result of this.
Along with China, Brazil, and Mexico, Trump has labelled India a high-tariff nation and promised to take action.
However, India has not yet been the target of any particular measures, and both parties have discussed enhancing their economic and commercial ties.
Given the strong relationship between the two leaders, Modi’s visit with the US president is anticipated to merely facilitate the process.
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