For America, why India is not China

Ten reasons why the Trump Administration should hold off on tariff hikes for India

- Piyush Doshi

As Donald Trump begins his second term as United States (US) President, speculation is growing about the direction of his trade policy.

He has consistently voiced concerns about America's growing trade deficit and has called out the unfair trade practices of some of its trading partners.

While the primary target of President Trump's tariff moves has been China, he has made occasional noises about Indian trade practices.

If one looks closely at India-US trade data and the broader direction of the strategic relationship, it becomes clear that President Trump would do well to exclude India from tariff hikes because India-US trade relations are based on complementary strengths on fair terms and have been progressing well with substantial benefit to both countries.

Relations between the two countries extend well beyond trade, as India has emerged as a long-term economic and geopolitical ally of the US.

Here are the top 10 reasons why India is not China as far as trade with the US is concerned.

One, India's merchandise trade surplus with the US is insignificant compared to China's or those of other lower-cost economies like Vietnam and Mexico.

India accounts for just around 4% of the US trade deficit of over $1 trillion, while China accounts for almost 25% of the deficit.

In fact, India does not even figure among the top 10 US trading partners with whom the latter runs a high trade deficit.

Two, since India's economic liberalization, its trade relationship with the US has been progressing well, benefiting both countries.

Goods trade between India and the US has grown over 20 times since 1991 to over $120 billion.