Trump strips India of special trade status

US President Donald Trump had announced his intention to remove India from the Generalised System of Preferences programme in early March.
US President Donald Trump had announced his intention to remove India from the Generalised System of Preferences programme in early March.PHOTO: NYTIMES

WASHINGTON (NYTIMES) - The Trump administration announced on Friday (May 31) that it was stripping India of a special status that exempts billions of dollars of its products from US tariffs, part of a deepening clash over India's protections for its market.

The White House said that it would terminate India's preferential market access to the United States as of June 5.

The notice claimed that India had not given the United States "equitable and reasonable access to its markets".

The administration said it would also apply to India tariffs on solar panels and washers that President Donald Trump announced last year, suspending an exemption it had granted to certain developing countries.

The measure will hit some Indian exporters of products like textiles, jewellery, auto parts and agricultural products, and aggravate tensions between the United States and a country the Trump administration has described as an ally to counter China.

After Trump's election, he and Prime Minister Narendra Modi of India emphasised their close relations. And in 2018, the administration rolled out a foreign policy for a "free and open Indo-Pacific" that relied on a group of countries called "the Quad": the United States, India, Japan and Australia.

But relations have steadily worsened since then. Trump has been far more focused on trade fights on other fronts, including negotiations with China, Europe and Japan, and an effort to ratify a new trade agreement with Canada and Mexico.

 
 

But trade tensions with India have been quietly simmering after the country rebuffed US efforts to open Indian markets to US dairy products, medical devices and other goods.

US technology companies have complained about measures India uses to protect its internet industry. And Trump has criticised India in particular for charging high tariffs on US motorcycles.

"India is a very, very high-tariff nation, and they charge tremendous, tremendous numbers," Trump said in March.

The programme India is being expelled from, called the Generalised System of Preferences, was devised to allow developing countries to alleviate poverty through trade. About US$5 billion (S$6.9 billion) of the US$83.2 billion of goods that India sent the United States last year qualified for the tariff exemptions.

The president removed Turkey from the programme on May 16.