Washington: President Donald Trump said Thursday that he’ll sign an order that increases US tariffs to the rates other countries charge on imports.
“TODAY IS THE BIG ONE: RECIPROCAL TARIFFS!!!” Trump posted on his social media site, Truth Social. “MAKE AMERICA GREAT AGAIN!!!”
The prospect of a dramatic hike in tariffs could send shockwaves through the world economy, possibly depressing growth while also causing inflation to intensify.
Trump has maintained that such tariffs will help to create domestic factory jobs, but most economists say there would effectively be a tax increase on US consumers that would add to inflationary pressures.
Trump’s tariffs
The Republican president has openly antagonised multiple US trading partners over the past several weeks, levying tariff threats and inviting them to retaliate with import taxes of their own that could send the economy hurtling into a trade war.
Trump has put an additional 10 per cent tariff on Chinese imports due that country’s role in the production of the opioid fentanyl.
He also has readied tariffs on Canada and Mexico, America’s two largest trading partners, that could take effect in March after being suspended for 30 days.
On top of that, on Monday, he removed the exemptions from his 2018 steel and aluminum tariffs. And he’s mused about new tariffs on computer chips and pharmaceutical drugs.
The European Union, Canada and Mexico have countermeasures ready to inflict economic pain on the United States in response to Trump’s actions, while China has already taken retaliatory steps with its own tariffs on US energy, agricultural machinery and large-engine autos as well as an antitrust investigation of Google.
Trump has not specified how he defines the term “reciprocal” and whether his order would apply only to matching tariffs or to including other foreign taxes that he views as a barrier to exporting American goods.
Modi in US amid Trump’s tariffs threat
The Prime Minister’s visit to the American capital comes days after the Trump administration deported 104 Indians in handcuffs and shackles on a military aircraft that sparked outrage in India.
Last week, External Affairs Minister S Jaishankar said in Parliament that New Delhi is in touch with the US to ensure that returning Indian deportees are not mistreated in any manner.
Another major issue on the table is set to be trade, as Trump’s policy on tariffs on rivals and allies alike.
Modi’s visit to the US comes shortly after Trump announced a 25 per cent tariff on global steel and aluminium imports into the US. The move is expected to hit the Indian firms exporting steel and aluminium to the US.
Modi’s key priority is likely to be to pre-empt any punitive trade action by Washington against India.
People closely tracking India-US ties said there is a possibility of both sides exploring the option of looking at a trade pact to avoid high tariffs and expand the overall trade basket.
In their meeting, the two leaders are likely to broadly focus on ramping up India-US cooperation in sectors like trade, investment, energy, defence, technology and immigration.
Apart from some possible sector-specific outcomes, it will be interesting to see the optics and what kind of broader signal the meeting between Modi and Trump, known for their personal bonhomie, produces with sensitive issues like immigration and tariff expected to be focus of the talks.
India to lower guard
India has already indicated its readiness to adopt a more conciliatory approach on the sensitive issue unlike its hardline approach during Trump’s first term.
It is learnt that New Delhi may consider slashing tariffs in at least a dozen sector provided some reciprocity by the White House. Modi and Trump are unlikely to discuss specifics on tariff but the two leaders may deliberate on a broader picture.
The bilateral trade between India and the US was around USD 130 billion last year.
The two leaders are also likely to touch upon overall situation in the Indo-Pacific, Ukraine and developments in West Asia.
Modi and Trump, during a phone conversation on January 27, vowed to work towards a “trusted” partnership with a focus on boosting India-US cooperation in areas of trade, energy and defence.
Following the phone talks, the White House said Trump emphasised the importance of India increasing its procurement of American-made security equipment and moving toward a fair bilateral trade relationship.
Modi and Trump are likely to focus on boosting the energy ties.
On February 1, New Delhi announced plans to amend its nuclear liability law and set up a nuclear energy mission.
Certain clauses in India’s Civil Liability for Nuclear Damage Act, 2010 have emerged as hurdles in moving forward in implementation of the historic civil nuclear deal that was firmed up between the two strategic partners around 16 years back.
It is learnt that India is looking at the possibility of civil nuclear cooperation with the US in the small modular reactors (SMRs).
Modi arrived right after his visit to France where he had co-chaired the Artificial Intelligence Action Summit with French President Emmanuel Macron.
He is the fourth foreign leader hosted by Trump over the weeks since his inauguration.
Within less than a month of the start of his second term in the White House, Trump has hosted Israeli Prime Minister Benjamin Netanyahu, Japanese Prime Minister Shigeru Ishiba, and Jordan’s King Abdullah II.
(with inputs from PTI)
