Bhubaneswar: Indian PM Narendra Modi is only the 4th foreign head to visit USA since the inauguration of President Donald Trump. White House has hosted heads of the countries like Israel, Jordan and Japan till date.
The visit of PM Modi to White House assumes significance when high tariff on US goods by many trading partners of US are under the scanner of US president Donal Trump.
President Trump declared an economic emergency to place duties of 10% on all imports from China and 25% on imports from Mexico and Canada. The targeted countries are the United States’ three largest trading partners.
India has been spared from Trump’s tariff strike, though President Trump has repeatedly referred India as “Tariff King” and “big abuser” of trade ties.
When President Trump spoke to Modi in January, US President emphasized the importance of India buying more American-made military gear and weapons, as well as reducing the trade imbalance.
In this backdrop, President Trump hosting PM Modi at White House assumes significance. Here is an account on how India – US trade ties travel.
Before delving into the trade ties between US and India, it is pertinent to mention why President Trump has unleashed this punishing tariff strike on countries.
TRUMP, TRADE AND TARIFF
As per US Trade representative, the United States is the largest goods importer in the world. But is second largest exporter in the world. The following are the top-10 countries from which US imports goods.
- China
- Mexico
- Canada
- Japan
- Germany
- Japan
- South Korea
- Taiwan
- Vietnam
- UK
- INDIA
As US is the largest importer in the world, President Trump is levying high tariff on goods as counterproductive measure to discourage import of goods from the respective countries, even as this measure will make the goods/commodities costlier leading to higher inflation in USA.
President Trump is still launching this tariff strike on the countries as it will impact that country’s economy heavily as their manufacturing industries will record inventory leading to job loss and economic mayhem.
President Trump is levying tariff so that the countries will give a level playing field to Americans goods and commodities in their countries..
INDIA – US TRADE TIES
United States Exports to India was US$41.75 Billion during 2024, according to the United Nations COMTRADE database on international trade.
As per US Census Foreign Trade, Indian imports to US in 2024 stood at $83.686Billion.
As a consequence, India has a positive trade surplus (or say trade balance in India’s favour) of $43.311bn.
WHY TRUMP IS ANGRY OVER INDIA?
The main reason why US President is angry with India over the bilateral trade has been the following.
- In Trump's first term (year 2020) the trade surplus India had with US was $24.172bn
- In 2024, the trade surplus increased to $43.311bn, which is nearly doubled.
- Bilateral trade has been rising with great pace, but the favour of trade balance remains with India.
- As the trade surplus between the two countries has nearly doubled, favouring India, US is angry with India over the trade ties.
- Indian tariffs on imported goods averaged 11.5% in 2022, according to the World Bank, compared with 1.5% in the United States.
TARIFF ON INDIAN GOODS WILL IMPACT INDIA HARD THAN US
The Trump administration’s decision to levy tariff on Indian exports will hurt India most, because India has been US 10th largest trading partner. The Indian exports to US stands at nearly $84bn in 2024.
On the contrary, US had been India’s largest trading partner. Higher tariff will hit Indian exports and in turn the economy.
LARGEST INDIAN EXPORTS TO US
Major exported items from India to the US include
- Engineering goods
- Electronic goods
- Gems and Jewellery
- Drug formulations and biological
- Petroleum products
- RMG cotton
LARGEST US EXPORT TO INDIA
- Mineral fuels, oils and distillation products
- Pearls, precious stones,metals and coins
- Machinery, nuclear reactor, boilers
- Aircraft, spacecracft etc..
HOW INDIA CAN DUCK TRUMP STRIKE?
In the above context, India has taken the following steps to mitigate the US trade measures.
- Lowering its own tariffs on U.S. goods
- Union budget 2025 reduced duties on Harley-Davidson motorcycles, from 50% to 40%.
- In 2023, India had dropped retaliatory tariffs on U.S. almonds, apples, chickpeas, lentils, and walnuts.
- India may offer to buy more natural gas from USA to narrow the burgeoning trade deficit with US.
- India may also increase purchase of defence equipments to narrow the gap.
- Recently U.S.-based GE(General Electric) partnered with Hindustan Aeronautics (HAL) to produce jet engines for Indian aircraft in India
- The sale of U.S.-made armed MQ-9B SeaGuardian drones to India.
In the above backdrop, it seems unlikely that USA will launch tariff strike on India. So, all eyes are on the Trump – Modi meet today (Thursday).
