US cancels high level dialogue with India as trade tensions escalate; Mike Pompeo calls Sushma Swaraj, cites 'unavoidable reasons'

The United States on Wednesday postponed the high-level '2+2' talks with India scheduled for next week in Washington even as its ambassador to the United Nations Nikki Haley met with India's prime minister Narendra Modi and top political leadership in New Delhi. The announcement comes at a time of heightened trade tensions between the two countries. No new dates for the meeting have been announced.

 US cancels high level dialogue with India as trade tensions escalate; Mike Pompeo calls Sushma Swaraj, cites unavoidable reasons

File image of US Secretary of State Mike Pompeo. AP

India last week announced a plan to raise tariffs on 29 US imports in retaliation for the US decision to include India in its list of countries covered by higher steel and aluminium duties. The United States attacked first, imposing tariffs on steel and aluminum from around the globe and threatening to hit tens of billions of dollars in Chinese products.

Now, the world is punching back and India is very much part of the mix.

US Secretary of State Mike Pompeo called up India's foreign minister Sushma Swaraj to "express his regret and deep disappointment at the US having to postpone the 2+2 Dialogue for unavoidable reasons", India's external affairs ministry's Raveesh Kumar tweeted.

Swaraj and defence minister Nirmala Sitharaman were to hold talks with their American counterparts Mike Pompeo and James Mattis next week on economic, trade and defence issues.

With today's announcement, it's the second time that the 2+2 dialogue has been scrapped after an earlier effort to make this happen in March bit the dust. The two sides agreed on this format after Indian Prime Minister Narendra Modi's meeting with Donald Trump in June 2017.

Foreign policy mavens reacted on social media platforms with their pet theories on what drove the US decision Wednesday.

Some say Harley (Davidson), others are pointing to a scheduling snafu colliding with a possible Putin-Trump summit. It's fairly obvious though, that the pain points on trade have been spiralling and not just with India.

Earlier this week, Trump tore into Harley Davidson which operates assembly plants in India (apart from Manaus, Brazil, and Bawal) to make motorcycles for those local markets where tariffs on imported bikes are steep. The India plant also makes certain models for other markets outside North America.

Those plants receive many of their parts from Harley's plants in the US, primarily from Wisconsin. Those who follow the Harley stock know that the iconic company is being weighed down by its heavily America centric business model and is desperately searching for ways to reduce manufacturing costs because their better performing markets are across the Atlantic.

With Trump doubling down on Harley with his America First rhetoric, his base has begun speaking out against Harley's existing assembly lines in Asia, including the Indian operation.

In a midterm election year, with Trump running on hardline immigration and whipping up nationalist sentiment, the ducks line up quite neatly to explain why US may be in no hurry to meet with allies half way across the world.

Meanwhile in New Delhi, US ambassador to the United Nations Nikki Haley said her two-day visit to India is aimed at solidifying the partnership between the two countries. She met with Prime Minister Modi and Swaraj on Wednesday.

U.S.-India relations have generally prospered in the past decade, in part because of their shared concerns about the rise of China. Both share goals of security, free navigation, free trade and fighting militants in the Indo-Pacific region.

To improve India's military capabilities, the United States has offered to sell it unarmed Guardian surveillance drones, aircraft carrier technologies and F-18 and F-16 fighter aircraft.

Haley and Modi discussed ways to enhance India-U.S. cooperation, including on counterterrorism, said a statement from the Indian prime minister's office.

The statement did not say whether Haley raised the issue of India cutting its dependence on Iranian oil following the U.S. decision to withdraw from a 2015 nuclear deal with Iran.

The Trump administration is pushing countries to completely eliminate oil imports from Iran by 4 November. India and South Korea, both close U.S. allies, are among the largest importers of Iranian crude oil.

Following Washington's withdrawal from the Iran deal, India said it would comply with the United Nations sanctions and not any country-specific sanctions.

Updated Date: Jun 28, 2018 06:52:59 IST