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Regular-article-logo Sunday, 18 May 2025

Tit-for-tat tariff against US ready

India notified retaliatory tariffs on 30 products worth $240 million imported from the US to counter the unilateral hike in duties on steel and aluminium by Washington.

Our Special Correspondent Published 22.06.18, 12:00 AM

New Delhi: India notified retaliatory tariffs on 30 products worth $240 million imported from the US to counter the unilateral hike in duties on steel and aluminium by Washington.

However, the increase in duties, which does not include motorcycles above 800cc such as Harley Davidson, will come into effect from August 4. This would give the government enough space to draw some concessions during trade talks with US officials next week.

The finance ministry notification said the import duty on chickpeas has been raised to 60 per cent, and on lentils the levy will be 30 per cent.

The ministry, however, did not disclose the current tariff levels. Other items drawing higher tariffs include artemia, which is a shrimp variety, apples, walnuts, boric acid, diagnostic reagents and some iron and steel products.

With the United States adopting protectionist policies and hiking import duties, a trade war-like situation has emerged. The European Union has decided to levy higher import duties on a variety of US products and a similar action is being contemplated by China .

Analysts said the retaliatory tariffs could have come into effect immediately, but India seems to have given some more time to the US as the upcoming negotiations with Washington could include a trade package.

The US assistant trade representative (USTR) Mark Linscott is slated to visit India in the last week of June to begin the negotiations.

Deloitte India partner M.S. Mani said on several products such as pulses the increase is very steep (30 per cent to 70 per cent), while for iron and steel products, the increase is at least 50 per cent of the existing rate (from 15 per cent to upwards of 22.5 per cent).

"The increase in customs duties on goods originating from the US was expected, but the magnitude of the hike would have been unexpected. These increases would make the domestic products cheaper compared to imports and lead to a domestic manufacturing/demand pick-up as a corollary," Mani said.

During the talks both sides will first try to "address low hanging fruits", including greater market access for each other's products and see how to resolve the crucial issues without further flaring up the situation, officials said.

The talks are likely to involve negotiations granting an extension to India on the generalised system of preferences (GSP) that the US is currently reviewing. India exports about 3,500 items worth $5.6 billion to the US at zero or low duties.

The GSP scheme, which is being reviewed by the US, allows many Indian exporters to sell at lower tariffs to the US. The US has, however, sought to reduce the number of products covered under this programme, including in the areas of dairy, chemical, engineering and medical devices unless India gives a reciprocal market access and removes barriers for products of their interest.

The decision to hike duties is in retaliation to the unilateral increase in tariff by the US on certain steel and aluminium products earlier this year which had a tariff implication of $241 million on India.

The duty hike by India would have an equivalent tariff implication on the US. India had asked the US government to exempt it from the 25 per cent steel tariff and 10 per cent aluminium tariff. However, the US rejected India's request. India has also dragged the US to the dispute settlement mechanism in the WTO over the matter.

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