India still has trade barriers against American farmers, U.S. Commerce Secretary Howard Lutnick told Bloomberg Television in an interview.
He clarified that President Donald Trump understands the significance of negotiating trade deals with countries—including India—that already impose restrictions on U.S. agricultural products.
"Trump is president of the United States of America and not the president of the world," Lutnick said.
In the course of the discussion, Lutnick commended Mexico and the United Kingdom for eschewing retaliatory tariffs on the U.S. He warned that nations in response to U.S. protectionism with countervailing actions risk provoking Trump into intense reactions.
If you get him upset, he comes back unhappy," Lutnick said, referencing Trump's latest move to levy a 200% tariff on European Union alcoholic beverages in a tit-for-tat for the EU's reaction against U.S. tariffs on steel and aluminum.
Lutnick pointed out that Trump aims to remove trade barriers limiting American exports and advance key manufacturing bases vital to national security. He mentioned that nations ready to engage in cooperation on trade would enjoy favorable treatment.
To those that "go right back to old-school" tit-for-tat trade actions, "the president's going to deal with them with strength and with power," he stated.
Lutnick also called on India to open up its farm sector to global trade, stressing that "it just can't stay closed."
Even in the face of American pressure to open up India's market more for the entry of goods like nuts, fruits, and chicken, the Indian government has been adamant on citing domestic issues. "Indian market for agriculture has to open up. How you do that and the scale by which you do that, may be, do quotas, may be do limits," Lutnick recommended. He conceded that full liberalization may not be possible but outlined a strategy in trade talks.
Urging India to "step out of the model," Lutnick reaffirmed his demand for a bilateral deal, contending that a trade agreement with the U.S., "the largest consuming economy in the world," would be beneficial.
Trump, meanwhile, has ramped up his tariff plan, announcing to impose similar tariffs on India and other countries from April 2. Trump says these actions are to retaliate against high import tariffs on American products.
Industry experts cautioned that if the U.S. goes ahead with these tariffs, they will have a major impact on India's most important export industries such as automobile parts, electronics, textiles, diamonds, jewelry, chemicals, and pharmaceuticals.
Trump made his latest threat of tariffs in a speech to a joint session of Congress, bracketing India with the European Union, China, and Canada as countries that are imposing excessive trade barriers against U.S. goods.
With the April 2 deadline approaching, India has less than three weeks to formulate a response. In February, both countries had agreed to work toward a trade deal by the end of the year, setting an ambitious goal of reaching $500 billion in annual trade by 2030 during Prime Minister Narendra Modi’s visit to the U.S.
As they wait for Washington to take further action, Indian officials are optimistic about being able to make headway in talks. Experts, however, warn that some of India's key export sectors may be severely hit.
To gauge the likely effect of the suggested U.S. tariffs and consider potential trade-offs, India's ministry of commerce and industry has begun consultations with stakeholders. An inter-ministerial committee is also studying the overall implications of these actions.
"We hope many problems get settled over the next couple of days so the effect of the tit-for-tat tariffs is minimized," said an Indian official.
India would give concessions in duties on many American industrial items in return, trade analysts hint. India could also grant extra concessions on tariffs to products currently already eligible under prevailing free trade pacts (FTAs) without including the agriculture sector, sources say.
"India should make this offer prior to April, before any U.S. tariff announcements. In case other nations raise objections, India can subsequently inform the agreement to the WTO as a goods-only trade accord," said Ajay Srivastava of the Global Trade Research Initiative (GTRI).
Some of the most important U.S. exports to India, including motorcycles, apples, cranberries, almonds, chickpeas, and diagnostic reagents, are facing high import tariffs at present. While India reduced the tariff on motorcycles in its February 1 budget, they remain at a 30% duty. Other items, including almonds (42-120%), apples (50%), and diagnostic reagents (35%), continue to enjoy hefty tariffs.
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