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India contributes only 3.2 per cent of America’s overall trade deficit and ranks ninth in the list of highest contributors to the US trade deficit.
US President Donald Trump with PM Modi | File Image/PTI
United States President Donald Trump excluded India in the first set of tariffs announced on Friday, which imposed 25 per cent tariffs on Mexico and Canada, and 10 per cent on China.
The development came after the Republican President vowed to protect American rights. The new measures, effective from February 1, focus on the countries contributing most to the US trade deficit.
According to the Research and Information System (RIS), China, Mexico, and Canada are the leading contributors to the US trade deficit, with China accounting for 30.2%, Mexico 19%, and Canada 14%.
Meanwhile, India contributes only 3.2 per cent of America’s overall trade deficit and ranks ninth in the list of highest contributors to the US trade deficit.
“We have big deficits with all three of them. And in one case, they’re sending massive amounts of fentanyl, killing hundreds of thousands of people a year with fentanyl. And in the other two cases, they’re making it possible for this poison to get in. We have about a $200 billion deficit with Canada… and a $250 billion trade deficit with Mexico,” Trump said while addressing the reporters.
Despite his repeated criticism of India’s tariff structure, Trump’s first executive order on February 1 to impose trade tariffs did not include India, suggesting that bilateral trade negotiations could take place later this month during Prime Minister Narendra Modi’s scheduled visit to the US.
The Economic Survey released on Friday stated that, on a broader scale, India’s import tariff policy has evolved, striking a balance between domestic policy objectives and the need to integrate with the global economy.
“Tariffs vary by sector, with considerations such as protecting sensitive sectors from foreign competition and permitting access to important raw materials and intermediate goods. India has ensured that tariff policies comply with WTO rules and regulations. Over time, several efforts have been made to rationalise tariffs further and address the inverted duty structures,” the survey said.
The Peterson Institute for International Economics, in its January 17 report, stated that if the US imposed an additional 10 per cent tariff on China and China retaliated similarly, US GDP would be $55 billion lower over the four years of the second Trump administration, while China’s GDP would be reduced by $128 billion.
In December, NITI Aayog CEO BVR Subrahmanyam noted that trade policies under Donald Trump could potentially spark an economic boom for India, driven by significant trade diversions in global commerce, according to the report.
