DNA Edit: US feels the heat – By raising import duties, India levels the score

US President Donald Trump finds himself increasingly isolated in the global community, thanks to the trade wars he is waging. An embittered India has now opened up a new flank of resistance alongside European Union and China, which are already opposing America’s tariff hikes. In response to the Trump administration’s high-handedness of raising import duties on steel and aluminium, New Delhi hiked duties on 29 products coming from the US. Agricultural items such as chickpeas, Bengal gram and split red lentil would get substantially expensive following a steep hike in duties. Apples and a particular kind of shrimp won’t be spared either. Curiously, US motorcycles, Harley Davidson and Triumph, missed the axe, so to speak, though they did find mention on the list of 30 items that India submitted to the World Trade Organization last week to inform the trade body of its decision to take countermeasures.

The volume of bilateral trade, involving US and India, has gone up by leaps and bounds, touching $140 billion in 2017. In 2016, India was the ninth largest partner of the US. Though US trade deficit with India was more than $30 billion that year, New Delhi was optimistic about steering the imbalance in the right direction. There was a point when Trump repeatedly emphasised the need to increase trade volume with India. For an administration headed by a notoriously fickle President, a drastic change in course is a reality. Given that both countries had once decided to increase bilateral trade to $500 billion a year, Trump’s protectionist policies have posed a major impediment to economic progress. It was foolhardiness on the part of the US to believe that India would jeopardise its interests to keep Trump happy.

India’s decision to hike import duties will give a big boost to domestic production and decrease its reliance on US products. Manufacturing is a key area for growth, and New Delhi’s latest move will have a positive impact on this sector. Prime Minister Narendra Modi’s Make in India initiative was launched with the expressed aim of making the country a global manufacturing hub. The US and other developed economies have consistently resisted India’s aspirations because of the fear of losing their economic hegemony. They have time and again bent the rules of the game in trade summits and world forums, to their advantage. It’s ironical that the tools the G7 had employed to maintain its grip on the world economy have become counter-productive. The US had gone to great lengths to protect the interests of its own farmers and manufacturers.

Trump’s protectionist measures, including abandoning the Trans-Pacific Partnership, and his threat to walk away from the North American Free Trade Agreement are aimed at restricting access to foreign goods in the domestic market while flooding other countries with US products. But in a global economy that’s tightly integrated, the cushioning of blows may not be feasible in the long term. India, China and the EU should make Trump see reason.