How should India response to Trump Tariff

Relations between India and the United States (US) nosedived after President Donald Trump announced a 25 per cent punitive tariff on goods exported from India, in addition to the 25 per cent reciprocal tariffs.

Trump announced that he is halting the bilateral trade negotiations with India after Prime Minister Narendra Modi said that the interests of our farmers, fishermen, and milk producers would not be compromised. Later, India, Brazil, China, and Russia seemed to be drifting closer.

Meanwhile, the rupee depreciation has helped the exporters somewhat. We assume that, the Reserve Bank of India (RBI) will not intervene to arrest the weakening of the rupee.

With proactive, timely and targeted interventions by the government, we will be able to cope with the difficult times.

The US accounts for 18 per cent of our merchandise exports and 62 per cent of our services.

Many US companies have investments in India. Recently, many have set up global capability centres to take advantage of our cheaper educated manpower.

Many Indian companies rely on the US for technology transfer and software products. Substantial inward remittances come from millions of Indian residents living in the US.

Experts believe that, the tariffs will hit the US producers and consumers soon, provoking a backlash against Trump’s policies.

We need to bide our time till then and work the back channels to improve relations and also take steps to improve the competitiveness of our domestic producers.

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