A DAY after US Secretary of State Michael R Pompeo said there has been a lot of “noise” and New Delhi and Washington need to work on resolving their issues with “as little theatre as possible”, US President Donald Trump, in a blistering tweet on Thursday, targeted India for “very high tariffs”. He said New Delhi’s recent imposition of retaliatory import duties was “unacceptable” and should be withdrawn.
On Wednesday, External Affairs Minister S Jaishankar and Pompeo had played down concerns over India-US economic ties.
“I look forward to speaking with Prime Minister Modi about the fact that India, for years having put very high tariffs against the United States, just recently increased the tariffs even further. This is unacceptable and the tariffs must be withdrawn,” Trump tweeted on Thursday, about eight hours before he landed in a rainy Osaka.
Prime Minister Narendra Modi and Trump are scheduled to meet on the sidelines of the G-20 Summit on Friday at 9.15 am local time (5.45 am IST), along with Japanese Prime Minister Shinzo Abe, for the Japan-America-India trilateral, which will be followed by a bilateral between Modi and Trump at 9.35 am local time (6.05 am IST). A slot of 40 minutes has been kept aside, since Trump has a series of eight bilateral meetings.
The White House said in a statement that at the G-20 Summit, “President Trump will encourage our allies and partners to lower tariff and non-tariff barriers to free, fair and reciprocal trade.”
This is the first time that Trump has put out a critical tweet ahead of a meeting with Modi, who landed at about 7 am local time and held a bilateral meeting with Abe at 2 pm local time. He has, however, put out similar tweets on other world leaders earlier, including North Korean leader Kim Jong Un, German Chancellor Angela Merkel and British PM Theresa May.
The Indian delegation did not respond to Trump’s tweet, as Modi kept busy with his engagements, including an address to the Indian community in Kobe, about 33 km from Osaka.
The tone of Trump’s tweet contradicted the positive remarks by both Jaishankar and Pompeo in New Delhi on Wednesday. Following his meeting with Pompeo, Jaishankar had said that on the “outstanding issues” related to trade, they would take a “constructive and pragmatic view”. He said it was “natural” that “when you have trade, there will be trade issues”. “And I think the real test of our intentions is our ability to address them effectively,” he said.
Both Pompeo and Jaishankar had talked about the “noise”. “I would urge you not to be carried away by some of that noise. Instead, look at that — the basics. Look at our ability in the past to address a lot of that,” Jaishankar said.
In the past, Trump has spoken out on the 100% tariffs on Harley Davidson bikes, and has even called India “tariff king” in his speeches.
But there is a sense among Indian diplomats that Trump has been raising the issue to get a “win” from India, and Delhi’s decision to hike import tariffs on more than 20 items from the US — including almonds, apples and walnuts — on June 15, should be seen as “strategic” and could be leveraged as a “negotiating tool”.
Sources said one possibility is that the two sides may decide to have a mechanism to discuss “rationalising” the tariffs, and a dialogue framework may be instituted after the Modi-Trump meeting. “We will know once the meeting is over,” said a source.
While the India-US 2+2 dialogue is expected to be held later this year, these tariff related issues will be discussed at the level of commerce ministers at the economic dialogue, which can be scheduled at the earliest. They have already spoken in the last one month.
These tariffs were raised in retaliation to Washington’s decision, a year ago, to impose high import duties on steel and aluminium from around the world, including India. The Indian government had asked for a waiver, but did not get it.
After the US made the decision on GSP, where it revoked special trade privileges that gave Indian goods duty-free access to the US market, India decided to impose tariffs earlier this month.
The Indian side believes that the “high tariffs” is also borne out of misperception.
A diplomatic source said that while Trump keeps raising the issue of 100% tariffs on Harley Davidson, which sells just 80 units in a year, the US imposes 330% tariffs on Indian tobacco. The source said this doesn’t make India a high-tariff economy. In fact, India’s tariffs are largely in line with developed countries. “He needs better understanding and better briefing on these issues,” the source said.
While the growing friction over the economic relationship is expected to dominate the scheduled meeting, the Indian side is likely to express its gratitude for the heavy-lifting Washington did to list JeM chief Masood Azhar as a global terrorist at the UN Security Council.
The Indian side is also seeking to share its perspective on Iran as it argues for “de-escalation” by both Washington and Tehran. India has stakes in terms of energy security and its diaspora, which get adversely impacted by the tension and a potential conflict in the region.
However, the Indian side will maintain that it will remain firm on the S-400 deal with Russia, as Jaishankar has already told Pompeo that India will act in its “national interest”.
Sources said they will discuss the issue of Indo-Pacific at the trilateral meeting between India, US and Japan. Modi will separately meet Chinese President Xi Jinping and Russian President Vladimir Putin for the Russia-India-China trilateral meeting, as well as hold the BRICS leaders’ meeting on Thursday.