Trade Cases

U.S. Challenges India's Retaliatory Tariffs at WTO

July 9, 2019

The U.S. is taking issue with retaliatory tariffs imposed by India in response to the Trump administration’s Section 232 tariffs on steel and aluminum. In a request for consultation with the World Trade Organization, the U.S claims that India is violating Articles 1:1 and Article II 1(a) and (b) of GATT 1994.

India issued an order in June 2018 to raise import taxes on 20 U.S. products in retaliation to the steel and aluminum tariffs. The taxes ranged from 5 to 100 percent on products from almonds to motorcycles and were repeatedly delayed while the two governments sought to work out a trade deal.

On June 16, 2019, India expanded the product listing to 28, increased the custom duties and implemented the order on approximately $1.4 billion in goods. The trade measure followed a move on June 5 by the United States to halt trade privileges for India under the Generalized System of Preferences. The loss of GSP will impact New Delhi’s $5.6 billion of duty-free exports per year.

In its complaint to the WTO, the U.S. wrote: “India does not impose the additional duties measure on like products originating in the territory of any other WTO member. India also appears to be applying rates of duty to U.S. imports greater than the rates of duty set out in India’s schedule of concessions.”

Tweeting that “this is unacceptable and the tariffs must be withdrawn!” President Trump said he looked forward to discussing the matter with India’s prime minister at last week’s G-20 meetings. Those talks on the sideline failed to bring much relief to the increased tension between the United States and India. The two leaders discussed four issues: Iran, 5G, bilateral relations and defense relations.

U.S. Secretary of State Mike Pompeo, in a press conference last week with India Minister of External Affairs Subrahmanyam Jaishankar, said reinstating India to the GSP didn’t come up during discussions. “We didn’t discuss the lifting of that, but we agreed we would work through that problem,” said Pompeo. “We’re going to do our best to make sure that all the right people get in all the right places and work through these problems so that we can get on with the business of growing.”

On Tuesday, Trump reiterated his stance on India in another tweet: “India has long had a field day putting tariffs on American products. No longer acceptable!”