US Near Trade Deal with India: Trump

Chennai: While sending out letters on new tariffs capped at 40 per cent to 14 countries, which includes most of India’s Asian competitors like Bangladesh, Myanmar, Cambodia and South Korea, US President Donald Trump on Monday mentioned that a trade deal with India will be announced soon.

"We've made a deal with the United Kingdom, we've made a deal with China, we've made a deal - we're close to making a deal with India...Others we met with, we don't think we're going to be able to make a deal. So we just send them a letter," Trump said at the White House.

India can expect an announcement on the deal from the US before July 9, as per the earlier statements made by Trump.

Meanwhile, on Monday Trump sent letters announcing blanket tariff rates to 14 countries. These include Japan, South Korea, Cambodia, Bangladesh, Myanmar, Indonesia, Malaysia and Thailand. The new tariff rates for most of these countries are almost similar to the reciprocal tariffs announced on April 2. Going by the letters sent to the heads of the respective countries on Monday, the US seems to have capped the tariff rates at 40 per cent. Cambodia, which was imposed with a reciprocal tariff of 49 per cent, now has 36 per cent. Laos saw the tariffs reduced from 48 per cent to 40 per cent and Myanmar too got it reduced from 44 per cent to 40 per cent. The new tariff rates of Malaysia and Japan are one percentage point higher. Trump also warned that it would increase tariffs by the same percentage points if the countries retaliated.

Some of these countries have already evinced interest in bringing down their tariffs for US imports. Bangladesh considers offering zero-duty access to American goods. It had earlier offered to increase imports of goods, including aircraft, LNG, and wheat from the US. However, it does not want to adhere to US domestic laws in international trade and prefers to sign the agreement under the regulations of the World Trade Organization (WTO).

Malaysia too has stated that it wants “continued engagement with the US towards a balanced, mutually beneficial and comprehensive trade agreement”. Japan said that it will hold discussions with the US on a deal that benefits both nations, while asserting to refrain from “hasty decisions”.

While India is awaiting a trade deal announcement from the US, the risk of future unilateral tariff hikes or policy-linked penalties linger. Among the countries that received letters, including Japan and South Korea, already had trade agreements with the US.

Irked by the joint statement issued by BRICS nations on “unilateral tariff and non-tariff measures”, Trump on Sunday had threatened levy of an additional 10 per cent tariff.

“Trump’s deals do not meet WTO standards for Free Trade Agreements (FTAs). Under WTO rules, FTAs require mutual tariff reductions on a substantial share of trade. However, in the Trump model, only the partner country lowers its MFN tariffs. Trump lacks Fast Track Trade Authority from Congress to reduce MFN tariffs. Instead, he’s offering to roll back only the “Liberation Day” tariffs imposed in April under emergency powers,” said GTRI.