India entered the ongoing global trade war back in June when it announced retaliatory tariffs on a variety of US products like apples, almonds and walnuts for US President, Donald Trump’s duties on aluminum and steel imports. After the European Union, India is the next major market for California almonds and one of the top importers of apples. But, if these tariffs are implemented, India could be risking a targeted response from Trump’s White House.
As proposed by New Delhi, the tariff hikes were supposed to be implied on 29 US products worth approximately $241 million and were about to go live on 4th August 2018. But Narendra Modi, India’s Prime Minister, decided to delay the hikes and may even postpone the tariffs until next month, thanks to ongoing negotiations with US officials.
Currently, if both the countries cannot reach a standstill, India’s tariffs will go ahead as planned. In response, the US would make a move similar to what is happening with China as well. This could turn the tides against Narendra Modi who will campaign next year’s reelection, according to analysts.
As stated by Amitendu Palit, a specialist in economic and trade policy from the National University of Singapore, if Trump’s White House turns its attention to India’s primary exports to the USA like medicine, auto parts, seafood and diamonds, it could mean a riskier environment for the Indian economy, especially for Narendra Modi.
Amitendu Palit also said that Donald Trump’s team could also pressurize the Indian government to open up their dairy and agricultural industries, which are extremely and politically sensitive sectors of India’s rural-based economy.
India is known for high levies on the agricultural imports as a means to protect and safeguard the livelihood of the farmer population, which makes up for most of the population. USA has previously urged the Indian government to lower the agricultural tariffs; but now, since India’s response is mostly focused on agriculture, USA has an opportunity to up the ante.