Therefore, India imposes high tariffs on key agricultural commodities, especially food grains, to ensure proper availability at home, protect the livelihoods of smallholder farmers, and promote self-sufficiency. Now, in the name of reciprocity, India could face pressure to lower high tariffs on agricultural products, bringing them down to levels imposed by the US. However, India must argue that the US has never used tariffs to protect the agricultural sector. This is because the sector has historically benefited from subsidies that are far lower than the prices of international markets. This is the most important challenge for the Modi government.
He also directed his administration to investigate the economic and national security impacts and risks arising from the US’s “large, sustained annual trade obstacles in goods and such deficits.” , may be targeted as they have been instructed to recommend appropriate measures, such as global supplementary tariffs and other policies to improve deficits. India maintains trade surplus with the US The United States has more than doubled over the past five years from $17 billion in 2019-20 to $35 billion in 2023-24.
The President has proposed elaborate institutional measures to implement these. These measures show that they will be implemented in conjunction with stronger application of anti-dumping and offsetting operations already in place by the US.
If the Trump administration implements the president’s orders, the overwhelmingly large share of commodity trade, the second largest trading nation in the world, will be affected. In 2023, the US had a trade deficit with 13 of the top 15 trading partners, accounting for nearly 92% of total trade. 13 countries have the largest trade deficits of over $40 billion. Given the substantial deficit that the US has in most of its major trading partners, it is not clear how Trump can lower the deficit without substantially damaging the global trading system.
The first in America appears at a troubling time for the WTO. This has already been significantly undermined by Trump’s actions during his first term in which his institutional structure was severely damaged. As Trump’s first American trade policy advocates stronger, unilateral trade measures, questions are asked about the legitimacy of the WTO as an enforcer of multilateral trade rules.
(The view is personal)
(bisjit@gmail.com)
Biswajitdar | Former Professor at Jawaharlalnehur University and Vice-President of Social Development Council
