Modi-Trump talks: Will India’s concessions stop a tariff conflict with the US? 5 key factors

Modi-Trump talks: Prime Minister Narendra Modi will meet US President Donald Trump on February 13. The assembly with Trump will make Modi one of many first international leaders to go to Washington for the reason that US chief took workplace on January 20.

On this go to, Modi will attempt to decide up the place he left off 4 years in the past in wooing Donald Trump, as he provided fast tariff concessions in hopes of avoiding the second-term president’s wrath, in keeping with information company AFP.

For many years, US presidents, no matter get together, have prioritised constructing ties with India. India-US relations have at all times been seen by way of the prism of a rising China, and therefore, India is commonly seen as a pure accomplice.

The 2-way commerce between the 2 international locations exceeded $118 billion in fiscal 2023-2024, with India posting a surplus of $32 billion. 

Ups and downs in commerce relations

But, commerce relations between the 2 international locations have seen ups and downs even throughout Trump’s first time period. Having imposed tariffs on Canada, Mexico, and China, Trump has described India as a ‘tariff king’ and ‘abuser’ of tariffs prior to now.

In Could 2019, he terminated India’s preferential market entry – the Generalised System of Preferences– to the US, accusing India of not giving the US cheap entry to its markets. He additionally raised import obligation on Indian metal and aluminium merchandise. Trump has, nonetheless, by no means criticised Modi straight.

On February 10, Trump introduced a 25 per cent tariff on aluminium and metal imports with ‘no exceptions’ for any nation. Indian corporations concern a downward strain on home metal costs as a result of threat of dropping out within the US metal market, the biggest on this planet, in keeping with a report within the Indian Specific.

India’s concession efforts

So, how is India aiming to stop a tariff conflict with the US?

Union Finance Minister Nirmala Sitharaman slashed import tariffs, together with these on high-end bikes and electrical batteries in her Funds 202 final week. The choice taken days forward of Modi’s US journey can come as a lift to Harley-Davidson, the long-lasting US firm whose struggles in motorbike-loving India has captured Trump’s consideration, information company AFP stated.

“India has executed its groundwork and has already taken constructive steps to set a very good tone with Trump,” Lisa Curtis, the Nationwide Safety Council director on South Asia throughout Trump’s first time period informed AFP. Curtis, who’s now senior fellow on the Middle for a New American Safety, stated Modi has ready for this, and that the Indian Prime Minister is in search of to preempt Trump’s anger.

Further tariff cuts

PM Modi is getting ready extra tariff cuts forward of his assembly with Trump that would increase American exports to India and keep away from a possible commerce battle, authorities officers informed information company Reuters.

President Trump’s high financial adviser Kevin Hassett informed CNBC earlier this week that India has excessive tariffs that lock out imports and Modi would have quite a bit to debate with Trump when the 2 leaders meet. Hassett targeted on the subject of tariffs, and stated this will likely be a serious challenge that PM Modi might want to deal with throughout his upcoming go to to Washington.

“In the event that they go down, we’ll go down,” Hassett informed the information portal. “Virtually each buying and selling accomplice has a lot greater tariffs than we do.”

Modi is predicted to suggest elevated power and defence imports throughout a two-day US go to that begins Wednesday.

India, the Reuters report stated, is contemplating tariff cuts in at the least a dozen sectors, from electronics to medical and surgical tools, and chemical compounds, to spice up US exports according to New Delhi’s home manufacturing plans.

Fighter jet engine deal

India is in talks with the US for the acquisition and co-production of fight automobiles in addition to finalising a fighter jet engine deal, the report stated.

Modi’s US go to goals to keep away from a “commerce war-like state of affairs that’s taking place between the US and China,” an official was quoted as saying within the Reuters report.

Trump has already imposed sweeping 10 per cent tariffs on imports from China, spurring Beijing to reply with duties on American power.

Deportation Row

The Modi-Trump meet comes shut on the heels of the US sending again a primary batch of 104 Indian unlawful immigrants in shackles on a navy plane, triggering a political row in India. India’s acceptance of undocumented residents can be seen as a concession in direction of the US forward of Modi’s go to.

There are about 7.25 lakh unlawful Indian immigrants within the US. Some studies steered that 20,000 of those have already been recognized for deportation.

India has been receiving unlawful immigrants earlier than, however the photos of them in handcuffs in navy planes triggered a political row in India, with the opposition calling the remedy an ‘insult’ and accusing PM Modi of weak point towards Trump.