Trade Truce

The fresh Indo-US trade deal announced by US President Donald Trump on 2 February will see American tariffs on Indian goods go from 25 per cent to 18 per cent.

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An additional 25 per cent ‘penalty’ imposed on India for its purchase of Russian oil has also been dropped. India, on the other hand, will have to remove all tariffs and non-tariff barriers on US products. Both Trump and Prime Minister Narendra Modi are euphoric over the deal since on the surface it appears to be for mutual benefits. In the absence of a formal statement, there is no way to know exactly what they agreed to, Trump claimed that India has agreed to stop buying Russian oil and will purchase $500 billion worth of US goods—both of which seem hard to believe, while Modi has only stated that tariffs will be coming down. What counts at the moment is that the negotiated settlement has broken the logjam persisting for the past few months since Trump imposed the impossibly high tariffs.

The exact nature of the deal is still being kept a closely guarded secret probably fearing backlash, especially in India which seems to have caved under Trump’s constant pressure. It is suspected India has bartered away its vital interests in agriculture and dairy sectors due to which the government is shying away from sharing details of the agreement with the public.