Prime Minister Narendra Modi’s government is mulling over further possible tariff cuts ahead of his upcoming meeting with US President Donald Trump this week.
PM Modi’s two-day visit to the US, which is scheduled to commence on Wednesday, comes as Trump plans to introduce reciprocal tariffs, including a 25 per cent duty on steel and aluminium imports.
On the table when both leaders will sit down to discuss business, a major point of discussion is expected to be of trade, as India prepares to offer tariff cuts that could benefit American exports and help avert a possible trade conflict, as per a Reuters report.
The US recently imposed 10 percent tariffs on Chinese imports, prompting China to retaliate with duties on American energy products.
India has already taken steps to ease trade tensions, including lowering average import tariff rates from 13% to 11% in its latest budget and reducing taxes on high-end motorcycles and luxury cars.
Being the 47th President of the world’s most influential nation, Trump 2.0 is expected to change the geopolitical dimensions globally. Trump’s strong stances on some of the conflicting issues are likely to shift the paradigm of world politics. Trump has stated several times regarding his desire to end the Russia-Ukraine War through a peace deal. He also took credit for the ceasefire deal between Israel and Hamas.
If Trump lifts the sanctions on Russia, this will ensure the re-entry of Russian oil into the world economy. Consequently, prices of oil will decrease. Wheat prices will subsequently go down. The world can expect to witness considerable deflation in some of the Russian commodities. This scenario will benefit India in combating the challenges of current inflation rates.
It’s quite clear from the speeches of Trump that he doesn’t have a strong corner towards China. It was proven when he proposed 60% tariffs on the goods imported from China. There are also chances to remove the tag of Most Favoured Nations from China. This would pave the way for India. It can fill a major gap to boost exports to the US.
Donald Trump’s pronounced ideology “Make America Great Again!” is often discerned as hypernationalism by many. This might have direct implications for 7.25 million immigrants from India.
Trump-Modi talks might also feature the discussion on H-1B Visa. The visa denial rate has increased from 10% in FY 2016, followed by 13% in FY 2018, and 21% in FY 2019 under Trump’s first tenure of presidentship.
Pharmaceuticals is another sector that could be affected by Trump’s second tenure as the US president. Donald Trump’s objective is to accelerate US drug production. This is done to minimise the rates of medicines and related products for native Americans. The US had observed an increase in prices because of lobbying of different companies. India’s total pharma exports to the US is over 31%. This is followed by the UK and Netherlands which were about 3 percent each.
The automobile industry is an important sphere. The US is the largest market for India. India exports approximately 27% to the US. Trump’s support for fossil fuels might neglect the selection of EVs by consumers. In connection with this, there could be decreased subsidiaries to both customers and manufacturers. This could negatively affect the Indian EV products suppliers such as SONA BLW.
Trump has always been a staunch supporter of America First Policy. It reduced manufacturing exports for China and Mexico. This would reintroduce manufacturing to America. The imposition of tariffs on goods in the US led to inflation in the country. The Federal Reserve will attempt to combat this by increasing its rate of interest. Similarly, the Reserve Bank will increase the rate of interest that will be charged to the banks. Further, the banks will take up the higher rates of interest from their customers.
The evolving scenario underscores the need for India to strengthen its domestic capabilities while fostering regional partnerships, ensuring resilience against global political shifts.
