US becomes India’s top trading partner, surpassing China despite tariff row

Bilateral trade between the US and India reached $87.95 billion in 2018-19, making Washington New Delhi’s new top trade partner, despite President Trump’s increased pressure to negotiate a better deal for his country.

The US surpassed China in terms of bilateral trade with India last year, according to Commerce Ministry data, and the trend only increased in April-December 2019 despite the trade disagreements between New Delhi and Washington.

India had a trade surplus of $16.85 billion with the US in financial year 2018-19 (with total trade standing at $87.95bn, compared to $87.07bn with China) – which ironically is one of the top complaints of President Donald Trump, who is aggressively seeking ways to reduce America’s trade deficit.

Trade tensions between Washington and New Delhi reached new heights last year after the US removed India from its Generalized System of Preferences (GSP), a mechanism that grants tariff exemptions to certain favored allies. While the decision was meant to encourage India to drop levies on US goods, it backfired, resulting in a number of retaliatory tariffs on dozens of American products.

Ahead of his trip to India, Trump said that he happens “to like Prime Minister [Narendra] Modi a lot,” but reiterated that the US is “not treated very well by India” in terms of his vision of fair trade. Indians, likewise, are increasingly annoyed by the US leader’s economic policies and pressure.

With ongoing disputes and Trump himself admitting he is “saving the big deal for later,” possibly until after the 2020 US election, the chances of even a symbolic pact being signed on his much-anticipated two-day trip to India seem increasingly bleak.

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