Trump and India call off trade war

Officials and business leaders breathe a sigh of relief over lower tariffs, but the terms of peace are murky, writes Alex Travelli from Seoul

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Prime Minister Narendra Modi of India visited the White House last February, before relations between the countries soured.

(NYT)

The economic war the Trump administration unleashed against India last summer came to an abrupt end Monday with a pair of social media posts from President Donald Trump and then Indian Prime Minister Narendra Modi. What had begun as a dispute about trade and tariffs, and then escalated to include the Ukraine war, visas and more, was declared over.

Trump was first to share the news: “Our amazing relationship with India will be even stronger” and “the United States will charge a reduced Reciprocal Tariff, lowering it from 25% to 18%.”

In fact, most Indian goods have faced a 50% tariff — not 25% — since Aug 6, when Trump said the country should be punished for buying oil from Russia. That doubled a tariff that was already set higher than those burdening India’s competitors in Asia.

Mr Modi posted soon after, confirming that the two leaders had spoken, praising Trump personally as a peacemaker and saying the deal “unlocks immense opportunities” for both sides.

But aside from the new 18% tariff rate, all other aspects of the deal, as laid out in Trump’s post, leave enormous questions to be answered. Trump wrote that the new rate would be “effective immediately,” without much elaboration. Key terms remained murky, including Trump's claim that India agreed to spend $500 billion in the United States, something the Indian side did not immediately mention.

The announcements were greeted, initially at least, with a collective sigh of relief. Stocks in Asia jumped yesterday with shares in India rising nearly 3%.