As the US prepares to elect its next President in keenly contested election, irrespective of who the winner will be, there is unlikely to be a big change in the approach of the world’s largest economy when it comes to trade and investments relations with India, analysts and trade sources feel.
There will likely be continuation of the “America First” policy by the new administration though tools and pace of implementation of this slogan may differ between Donald Trump or Kamala Harris presidencies.
In the run-up to elections the Republican party candidate Trump has already announced that he will be raising import duties to 20% across the board and putting a 60% duty on Chinese imports. On some products like electric vehicles he has talked of 100% duties.
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For perspective, the trade-weighted average import tariff rate for industrial goods in the US is just 2.0%. About 94% of US merchandise imports are industrial goods, and half of those enter the country duty-free. On whether there can be sudden across the board duty hikes, trade expert and acting president and Distinguished Professor, Council for Social Development Biswajit Dhar says it is “possible” because Trump has done something similar in his previous presidency.
The outgoing Joe Biden administration has singled out China for punitive duties. On Chinese electric vehicles import duties of 100% have been imposed, on chips the duty has been raised to 50%. Apart from tariffs, the Biden administration has also through the Inflation Reduction Act unveiled massive subsidies for “re-industrialisation” of the US, meaning regaining the country’s acclaimed manufacturing prowess.
Each side of the US political divide has proved its commitment to re-industrialisation. If Harris wins then the US government may rely less on across the board hikes in import duties but put barriers to imports through imposition of environmental, labour and other standards, according to the CEO and director general of Federation of Indian Export Organisations (FIEO) Ajay Sahai.
“Biden has actually put in place very extensive industrial policy. One of the things that is given in the case of industrial policy is that tariffs are raised. The US will almost be starting from scratch because all the earlier manufacturing industry has almost disappeared.
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