India hikes customs duty on 28 U.S. products

Cheryl Sanders
June 16, 2019

From June 5, President Trump scrapped trade privileges under the Generalized System of Preferences (GSP) for India, the biggest beneficiary of a scheme that allowed duty-free exports of up to $5.6 billion.

India is preparing to impose higher tariffs on some imports from the United States including almonds, walnuts and apples, two sources told Reuters news agency.

In a late evening notification, the Union Finance Ministry said that the decision was taken in public interest.

India would get about Dollars 217 million additional revenue from such imports.

"The retaliatory duties on American items are likely to come into effect after June 16, as the government, last month, had postponed implementation of the duties till that date", the official said. "Although I wouldn't say this is an extension of the trade war, it certainly is a skirmish - and one that will help shape India-U.S. ties going forward". The move is a response to higher tariffs imposed by Washington on Indian products like steel and aluminium. These benefits were rolled back from June 5.

India's proposed move to put in place retaliatory tariffs comes just a few days ahead of the scheduled visit of US Secretary of State Mike Pompeo, who is expected to discuss defence and trade issues with Minister of External Affairs S Jaishankar.

Tariffs on almonds, for example, will go up about 20% under the new rules - but that translates into a wholesale price increase of about 4.5 cents per pound for almonds in the shell, according to industry officials.

The duty on boric acid and binders for foundry moulds would be hiked to 7.5 per cent, while that on domestic reagents will be increased to 10 per cent. Duty on artemia, a kind of shrimp, will be hiked to 15 per cent.

Industry estimates have pegged the additional burden on United States items exported to India at $290 million.

India's move sends a message to the USA that the "trade partnership will have to be on better terms", said Bipul Chatterjee, executive director of CUTS International, a Jaipur-based think tank.

India had announced retaliatory tariffs worth $230 million on 29 American goods in June past year. Trade between them stood at about $142.1bn in 2018.

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