India Becomes Trump's Latest Trade Target

Donald Trump Says He Plans To End India's Preferential Trade Treatment

Washington announced on Tuesday its decision to pull the plug on the Generalized System of Preferences (GSP) scheme for India citing "its failure to provide the U.S. with assurances that it will provide equitable and reasonable access to its markets in numerous sectors".

On US President Donald Trump's observation that "India has not assured the United States that it will provide equitable and reasonable access to the markets of India", Wadhawan said, "We were successful in formulating a reasonable package which addressed all concerns of US but there were additional requests which could not be accommodated".

Mr Trump has pledged to reduce USA trade deficits, and has repeatedly called out India for high tariffs.

In a series of tweets on Tuesday, Pekcan said the decision to remove Turkey from the Generalized System of Preferences (GSP) would also affect small- and medium-sized businesses in the U.S., and added that Turkey would continue to work on increasing the volume of trade between the two countries.

On Monday, U.S. Trade Representative Robert Lighthizer announced that India and Turkey would lose their GSP status within 60 days. While it is not clear whether India will take retaliatory action, the world's fifth-largest economy has indicated that retaliatory tariffs will be kept out of current discussions.

India's commerce secretary, Anup Wadhawan, in a hurriedly-called press briefing, said that disproportionate demands from the USA led to the collapse of talks, although India was ready to offer the United States greater market access in agricultural products.

Meanwhile, Turkey's trade minister said Washington's plan conflicted with the North Atlantic Treaty Organisation allies' push to increase commercial exchanges.

Commenting on the GSP developments, the Federation of Indian Export Organisations (FIEO) said that withdrawal of benefits would not have a major impact of India's exports to the US.

Rossow said the real risk for India is losing market share.

Indian exporters said the USA move will have a marginal impact on their businesses, particularly exports of processed food, leather, plastic and engineering goods. Wadhawan argued that the GSP's actual benefit to the country was just $190 million.

In June 2018, India had chose to levy higher tariffs on products such as almonds, apples and phosphoric acid in retaliation to the United States unilaterally raising customs duties on certain steel and aluminium products.

Many experts are viewing this move as the US' reaction to some measures taken by India in the last couple of years, in terms of capping the prices of medical devices and a steep rise in tariffs on some goods that are of interest to American firms. President Donald Trump has set the stage for another tariff standoff, this time with India and Turkey.

The Trump administration has said it will terminate its preferential trade status to India and Turkey as the White House attempts to fix what it sees as imbalanced trade relations.

U.S. -India ties are more of "a collaboration of convenience", said Nick Bisley, an global relations professor at Melbourne's La Trobe University. "In a few instances, specific United States requests were not found reasonable and doable at this time by the departments concerned, in light of public welfare concerns reflective of India's developing country status and its national interest", Wadhawan said.

That sentiment has fuelled a damaging trade war between Washington and Beijing.

Mr Wadhawan added India does not plan to slap tit-for-tat tariffs on American goods in response to being dumped from the GSP.

India considerably capped the pricing of medical devices such as knee caps and stents past year, reducing it to as much as 60 per cent. They charge 100 percent.

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