Underlining his strong stance on protectionism and indicating that he could impose high tariffs on Indian imports, former US President Donald Trump called India a “very big abuser” of trade ties with the US. This has once again thrown the spotlight on the trade relations between the two countries.
Trump, who is the Republican Presidential nominee, is reported to have said that if his government is voted to power in the upcoming US Presidential elections, it would engage in reciprocal trade and would levy the same tariff as charged by other countries.
Indeed, higher tariffs by the US could prove to be a challenge for India given the muted export demand for several months amidst the global slowdown. More importantly, the United States is India’s top export partner with total exports of $ 77.5 billion in FY24 and total bilateral trade was about $ 120 billion.
While China remained India’s top trading partner last fiscal, the United States took over this top slot in the months of January to June 2024, a recent report by the Global Trade Research Initiative revealed. “From January to June 2024, the United States became India's largest trading partner, with total trade growing from $59.4 billion to $62.5 billion, a 5.3% increase,” said the report.
Exports to the US increased from $37.7 billion in January-June 2023 to $41.6 billion in January-June 2024, reflecting a growth of 10.5%, the GTRI report revealed. China has however, remained India’s largest import supplier in the first half of 2024 with imports increasing from $46.2 billion to $50.1 billion. However, imports from the US decreased by 3.7% to $ 20.9 billion between January to June 2024 from $21.7 billion in the same period a year ago.
Over the years, the US and India have worked on strengthening trade ties and have been trying to resolve key issues and disputes bilaterally and at the World Trade Organization. In March this year, India and the US announced a mutually agreed solution and submitted a notification to the WTO’s Dispute Settlement Body in a dispute around India’s measures concerning the importation of certain agricultural products. In February, India cut import duties on a number of food items including frozen turkey, cranberries and blueberries, in line with the agreement with the US in September 2023 to resolve the long standing dispute.
Previously in June 2023, India and the US had also agreed to terminate six outstanding disputes at the WTO. At that time India had reduced tariffs on certain US products, including chickpeas, lentils, almonds, walnuts, apples, boric acid, and diagnostic reagents.
However, there have been concerns as well. For instance, India’s sudden decision to ban exports of non white basmati rice in July last year lead to panic buying by consumers in the US. Similarly, India’s decision on a laptop import licensing policy has also triggered concerns amongst several nations including Japan, China and the US. The issue was also raised by the US Trade Representative Katherine Tai last year.