On his first day in office, US President Donald Trump decided against immediately imposing China-specific tariffs, opting instead to focus on global trade practices.
His administration ordered an investigation into whether China had adhered to the trade deal signed during his first term. The move signals a shift from his previous rhetoric about targeting China with aggressive tariffs.
According to a fact sheet seen by Bloomberg News, the Trump administration plans to address unfair trade practices and currency manipulation by other countries while aiming to strengthen the U.S. industrial base.
During a press conference on Monday, Trump discussed potential tariffs but did not set a clear timeline.
He did express frustration with China's role in exporting fentanyl precursor chemicals and its influence over the Panama Canal, stating, "We’re not going to allow that to happen."
Trump also warned countries in the BRICS bloc, which includes India, that they could face higher tariffs.
Furthermore, he indicated that tariffs might be imposed if China blocks the sale of TikTok to a U.S. company.
Trump 2.0: Early decisions
This delay in imposing new tariffs is seen as a more measured approach by the new administration, with reports suggesting that Trump is shifting towards negotiation rather than immediate punitive action.
A person familiar with the decision told Bloomberg News that Trump is interested in engaging with Chinese President Xi Jinping on trade matters, possibly to renegotiate aspects of the deal made during his first term.
While Trump had promised significant tariff hikes during his campaign, including a 60% charge on Chinese goods, the decision to hold off on imposing tariffs offers some relief to businesses that feared immediate economic fallout.
In December, Trump renewed his threat of reciprocal tariffs, warning that the U.S. would match tariffs imposed by other countries.
India, known for its protectionist trade policies, has been singled out by Trump in the past, particularly for its high import duties. Trump criticised India alongside Brazil, calling out the country for imposing heavy tariffs on American goods.
This is not the first time India has been in the crosshairs of U.S. trade policy. Trump previously dubbed India the "tariff king" for its high import duties on products like Harley-Davidson motorcycles. While India did reduce some of these tariffs, Trump remained dissatisfied, stating, "India charges a lot."
Also read: More bark, less bite? Trump walks back China threat for now
US-India trade: A recap under Trump 1.0
The trade tensions between Washington and New Delhi reached a peak in 2019, when India retaliated against U.S. tariffs on steel and aluminum by imposing its own tariffs on American products.
In response, the U.S. withdrew India’s preferential trade treatment under the Generalized System of Preferences (GSP), which affected Indian exports.
Currently, trade between India and the U.S. is a major aspect of both economies.
In 2023-24, India exported goods worth $77.52 billion to the U.S., making it the country’s largest export market.
On the flip side, India imports $42.2 billion worth of goods from the U.S. Disruptions in this trade flow could severely impact key sectors such as IT, textiles, and pharmaceuticals, which are critical to India’s economy.
Looking ahead, India faces both risks and potential benefits under Trump’s second term. If the U.S. adopts a more protectionist stance, India may be pressured to lower its trade barriers.
On one hand, higher U.S. tariffs on Indian products could reduce their competitiveness. However, there is also an opportunity for Indian exporters to fill gaps in the U.S. market if Trump intensifies tariffs on China.
During the previous trade war, Indian exports benefitted from increased demand as U.S. companies sought alternatives to Chinese goods.
The strong geopolitical ties between India and the U.S. could help mitigate some of the challenges posed by trade disputes, with shared concerns over China’s influence strengthening their strategic alignment in the Indo-Pacific region.
Source Name : Economic Times