‘America First’ vs ‘Make in India’ | The Daily Star
12:00 AM, February 24, 2020 / LAST MODIFIED: 08:34 AM, February 24, 2020

‘America First’ vs ‘Make in India’

Trump to get grand reception from Modi, but a trade deal unlikely

The bonhomie between the two leaders of the world's largest democracies are well known. But apart from the optics and their mutual enmity to China, the ground reality is different.

Trade ties between the United States and India have long been problematic but under "America First" President Donald Trump and "Make in India" Prime Minister Narendra Modi, they have worsened.

While eclipsed by his trade war with China, Trump's tussle with India, and New Delhi's prickly reaction, has made a major pact unlikely during the American president's visit to the world's fifth-largest economy from today.

"They've been hitting us very, very hard for many, many years," Trump said of India ahead of the 36-hour trip to Ahmedabad, Agra and New Delhi accompanied by Commerce Secretary Wilbur Ross and others.

Trade between two countries hit almost $145 billion in 2018, with the US deficit of $25 billion.

Modi's "Make in India" drive is aimed at getting foreign companies to manufacture in the South Asian country and so reduce imports -- mirroring Trump's "America First" mantra.

India has long had a penchant for protectionism. Its import tariffs are among the world's highest. Under Modi, facing slowing growth, accelerating inflation and a widening budget deficit, this hasn't changed.

In recent months, Modi's government has hiked duties on US imports, including on $600 million worth of Californian almonds as well as apples, steel and chemicals coming into Asia's third-largest economy.

In its recent budget, the right-wing government raised tariffs on items such as shoes, children's tricycles and furniture, irking Washington which cancelled a visit by trade envoy Robert Lighthizer, reports said.

It has also slapped e-commerce regulations which hit firms like Amazon and Walmart.

However, many of India's recent moves have been in response to actions by the Trump administration, starting with its 2018 decision to impose tariffs on steel and aluminium from India and other countries.

India is the world's third-largest steelmaker, and its exports of steel products have tumbled 46 percent according to the Peterson Institute for International Economics. Exporters of mechanical and electrical machinery and auto parts have also suffered.

Last year, Trump added to the pain by suspending India's privileges under the decades-old US Generalized System of Preferences programme that had allowed it to ship $6 billion in goods duty-free.

United by mistrust of China, Trump's visit will see deals in defence and other areas, including potentially the supply of six nuclear reactors, the fruit of a landmark atomic accord in 2008.

The visit will be big on optics, with Modi and Trump appearing at a rally at the world's largest cricket stadium and the US president and First Lady Melania watching the sunset at the Taj Mahal.

But the main "deliverable" that both strongmen want is a big trade deal, and in its absence they might instead strike a smaller agreement, according to press reports.

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