US President Donald Trump announced plans Monday to end special trade treatment for India, accusing it of unfairly shutting out American businesses.
In a letter to Congress, Trump signaled his intent to remove India from a program that gives developing countries easier access to US markets. The Indian government “has not assured the United States that it will provide equitable and reasonable access to the markets of India,” the letter said.
The notice comes just weeks before Indian Prime Minister Narendra Modi faces a general election.
Trump has repeatedly slammed Indian duties on US goods. In January, he took aim at India’s 150% tariff on imported whiskey. Over the weekend, he blasted India as a “high-tariff” country.
Now, he’s moving to take India out of the preferential trade program, known as the Generalized System of Preferences (GSP), which lowers US duties on exports from 121 developing countries. India was the biggest beneficiary of the program in 2017, according to US data, with exemptions on goods worth $5.6 billion.
Indian Commerce Secretary Anup Wadhawan said Tuesday that the total benefit to India from the exemptions amounted to only about $190 million a year, describing them as “minimal and moderate.”
Last April, the US government said it would review India’s eligibility in the program after some American companies said their dairy and medical device shipments to India were being hurt by non-tariff barriers.
Wadhawan said India had proposed a “reasonable and meaningful” trade package to the United States, but that the two sides were unable to reach an agreement.
“There were some additional requests beyond that, which could not be accepted at this time,” he told reporters.
Trump’s letter to Congress starts a 60-day clock before he can take action, according to a statement from the Office of the US Trade Representative. The United States also plans to remove Turkey from the GSP program, the statement said, after finding that the country is “sufficiently economically developed” and no longer requires special access to the US market.
Trump’s move to end the preferential treatment of Indian goods comes just a few weeks after US Commerce Secretary Wilbur Ross pulled out of a trip to the country at the last minute. The Commerce Department said bad weather at the time led to his flight being canceled.
The GSP isn’t the only source of tension in the two countries’ trading relationship, which was worth $126 billion in 2017.
Tensions between New Delhi and Washington have increased in recent years as Trump’s “Buy American, Hire American” strategy has clashed with Modi’s campaign to “Make in India.”
India was one of many countries hit by US steel and aluminum tariffs last year. In retaliation, the Indian government announced its own tariffs on US goods worth $240 million, but it has yet to actually put them into effect.
Wadhawan said Tuesday that India would keep the possible retaliatory tariffs out of its continued trade discussions with the United States.