India-US Bilateral Trade Agreement (BTA)
Experts emphasize the need for India to secure a watertight bilateral trade agreement with the US to prevent arbitrary tariff increases. This follows the US's imposition of 25% tariffs on imports from Mexico and Canada, and increased taxes on Chinese goods.
Implications of US Tariff Policies
- India must safeguard its exports from increased competition in other markets where diverted Chinese goods may pose a threat.
- Increased tariffs on Chinese gems, jewellery, and smartphones could positively impact Indian exports in these sectors to the US.
Need for Stringent Safeguards
- Experts suggest ensuring that the India-US BTA includes strict measures to prevent any future withdrawal or misuse by the US.
- Examples such as replacement of NAFTA by USA with the US-Mexico-Canada FTA show the necessity for these safeguards.
Alternative Trade Proposals
- India might propose a zero-for-zero tariff deal where both countries eliminate tariffs on industrial products, instead of a full Free Trade Agreement (FTA).
Global Trade Dynamics
- Following the US's tariff increase, China retaliated with additional tariffs on American agricultural and food imports, escalating trade tensions.
- India needs a strategy to counteract China's potential aggressive market diversions due to these higher tariffs in the US.