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In response to a unilateral hike in import tariffs on certain steel and aluminium products by US, India has decided to retaliate by suspending concessions on 30 items it imports from US.

India on Wednesday, June 14, notified to the World Trade Organization (WTO) a revised list of 30 items imported from the US, including almonds, apples, phosphoric acid and motorcycles with engine capacity more than 800 cc (including Harley-Davidson Inc.), on which it intends to impose retaliatory tariffs.

India emphasised that the tariffs will be substantially equivalent to the amount of trade affected due to the US’ measures. Duties hiked by the US on certain steel and aluminium products would have implications of about $241 million on India, the raise in tariffs proposed by New Delhi too would have an equal implication on America, said a Business Standard (BS) report.

According to news agency PTI, US’ decision to hike import duties will have an impact of about $241 million — $198.6 million on steel and $42.4 million on aluminium. India exports only about 4 per cent of its steel and 2 per cent of aluminium to the US. India is looking to hit back with tariffs amounting to the same.

“The US would be collecting $241 million worth of duties by hiking tariffs on certain steel and aluminium items from India, we also proposed to withdraw concessions of a similar amount from these 30 products imported by India from the US,” said the BS report quoting sources.

Earlier in May, India proposed to raise duties by up to 100 per cent on 20 products such as almonds, apple and specific motorcycles imported from the US.

The additional duty proposed to be hiked on these items ranges from 10 per cent to 100 per cent. Another report, in LiveMint, said in the revised list, India has brought down the proposed maximum additional duties from 100% (on walnuts) to 50% (on Harley-Davidson).

“The revision is being provided to adjust the products and the tariff rates in accordance with India’s rights reserved vide its notification to the Council for Trade in Goods contained in the WTO document…of 18 May 2018.

“India hereby reiterates its decision to suspend concessions or other obligations notified to the Council for Trade in Goods on 18 May 2018…of the General Agreement on Tariffs and Trade 1994 and Article 8.2 of the Agreement on Safeguards, that are substantially equivalent to the amount of trade affected by the measures imposed by the United States,” according to a communication by India to WTO, reported BS.

It said that the proposed suspension of concessions or other obligations takes the form of an increase in tariffs on selected products originating in the US, based on the measures of America.

“The proposed suspension of concessions or other obligations takes the form of an increase in tariffs on selected products originating in the United States, based on the measures of the United States,” the notification read. “India wishes to clarify that suspension of concessions shall be equivalent to the amount of trade affected by the United States’ measures.”

“India reserves its right to further suspend substantially equivalent concessions and other obligations based on the trade impact resulting from the application of the measures of the US,” it added.

The country has proposed this move under the WTO’s Agreement on Safeguards. India has also dragged the US to the World Trade Organisations dispute settlement mechanism over the imposition of import duties on steel and aluminium.

The move comes at a time when India has decided to negotiate a “trade package” with the US to ease tensions between the two sides.

Earlier this year, US President Donald Trump announced a 25 per cent and 10 per cent tariff on imported steel on aluminium respectively from all countries, except Canada and Mexico. US is the world’s largest steel-consuming nation. Trump’s announcement, in line with his America First policy, sparked fears of a trade war after countries began mulling imposing their own tariffs.

India had asked the US government to exempt it from its 25% levy on steel and 10% on aluminium imposed by President Donald Trump on grounds of national security. However, the US rejected the Indian request. India has also dragged the US to the dispute settlement mechanism in the WTO over the matter.

Trade minister Suresh Prabhu said on Friday after a two-day US visit that the talks he had were held in a positive atmosphere and that trade officials from both sides would soon meet to resolve all pending issues.

Assistant US trade representative Mark Linscott is likely to visit India in the last week of June to negotiate a “trade package”, the official quoted earlier said.

The package is likely to involve negotiations granting an extension to India on generalised system of preferences (GSP) that the US is currently reviewing. India exports about 3,500 items worth $5.6 billion to the US at zero or low duties. In exchange, India may facilitate more US imports in items such as dairy products and Harley-Davidson motorcycles.

Trump has often raised the issue of higher tariffs on Harley-Davidson motorcycles imposed by India and has threatened to put reciprocal taxes on Indian bikes, which he has wrongly claimed to be selling “in thousands” in the US.

Addressing the press on the sidelines of the G7 summit in Canada’s Quebec City last week, Trump specifically named India, accusing it of charging 100% tariff on some US goods. “We’re like the piggy bank that everybody is robbing,” Trump said.

Unilateral tariff hikes undertaken by Trump administration have already got the US embroiled in a trade tariff war with EU and China which have hit back with retaliatory duties on US goods.

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