Former President Donald Trump revealed during a recent business roundtable in Doha, Qatar, that India has proposed dropping tariffs on US goods to zero. This response comes as the two countries are deep in the weeds of trade negotiations, shining light on the precariousness of their economic ties.
President Trump issued those remarks following a meeting with Apple’s Tim Cook. In the course of their conversation, he warned Cook against producing too much in India. This decision coincides with Apple ramping up pressures to diversify manufacturing outside of China. In the last year, India has manufactured $22 billion worth of iPhones. This achievement marks an almost 60% improvement in production over the last period.
Despite this positive backdrop, tensions are rising in the US-India trade relationship. India had already warned of retaliatory tariffs on US goods back when Trump raised tariffs on steel and aluminum. On May 12, India upped the ante by announcing that it would notify the WTO. They have floated a number of these countermeasures, including retaliatory tariffs on some American-made goods.
Trump’s assertion that India must go to zero tariffs might lead to a breakdown in bilateral trade relations. India has not reacted aggressively to such a proclamation. The country’s commerce ministry has so far remained silent on the issue. This puts us back to guessing on whether a grand deal is still in play.
It’s difficult to do business, extraordinarily difficult, very very hard to sell anything in India today. He stated, “It’s very hard to sell into India and they’ve offered us a deal where basically they’re willing to literally charge us no tariff.”
India is a major, eastern partner — and one that prides itself on its independence and longstanding nonalignment. Further, it is key to Japan and Australia’s significant support for the Quad alliance. This new coalition aims to provide a counter-weight to China’s increasing influence and threats in the region. Yet both countries remain deeply mired in the bilateral trade talks. Rather, they hope their efforts to build a more cooperative economic ecosystem will preemptively cool the existing tensions.
As these negotiations proceed, the results will surely define the future of bilateral trade and economic collaboration. These discussions go beyond just the immediate implications. They might reconfigure key manufacturing supply chains and industries for large companies, such as Apple, through strategic partnerships.
Leave a Reply