Trump demands withdrawal of India's 'unacceptable' tariff hike

[June 27, 2019]  By Neha Dasgupta

NEW DELHI (Reuters) - U.S. President Donald Trump on Thursday demanded India withdraw retaliatory tariffs imposed by New Delhi this month, calling the duties "unacceptable" in a stern message that signals trade ties between the two countries are fast deteriorating.

India slapped higher duties on 28 U.S. products after the United States withdrew tariff-free entry for certain Indian goods. Washington is also upset with New Delhi's plans to restrict cross-border data flows and impose stricter rules on e-commerce that hurt U.S. firms operating in India.

"I look forward to speaking with Prime Minister Modi about the fact that India, for years having put very high tariffs against the United States, just recently increased the tariffs even further," Trump said on Twitter.

"This is unacceptable and the tariffs must be withdrawn!" said Trump, who will meet Modi at this week's G20 summit in Japan.

Government sources rejected Trump's argument, saying Indian tariffs were not that high compared to other developing countries and U.S. tariffs on some items were much higher.

India's trade ministry did not immediately respond to a Reuters email seeking comment.

Trump's tweet came hours after U.S. Secretary of State Mike Pompeo left New Delhi after meeting Modi. Pompeo had said the nations were "friends who can help each other all around the world" and the current differences were expressed "in the spirit of friendship".

In one tweet, though, Trump may have badly undermined Pompeo's efforts to reduce friction between the two countries.

Trump in May scrapped trade privileges for India under the Generalized System of Preferences (GSP), under which New Delhi was the biggest beneficiary that allowed duty-free exports of up to $5.6 billion.

A man holds the flags of India and the U.S. while people take part in the 35th India Day Parade in New York August 16, 2015. REUTERS/Eduardo Munoz/File Photo

India initially issued an order in June last year to raise import taxes as high as 120% on a slew of U.S. items, incensed by Washington's refusal to exempt it from higher steel and aluminum tariffs.

But New Delhi repeatedly delayed raising tariffs as the two nations engaged in trade talks. Trade between them was worth $142.1 billion in 2018, with India having a surplus of $24.2 billion.

The relationship took a big hit with India's sudden introduction of new e-commerce rules for foreign investors in February.

That angered the United States which saw a protectionist New Delhi effort to help small traders at the expense of U.S. firms such as Walmart and Amazon.com Inc.

Companies such as Mastercard and Visa have also been battling Indian central bank rules that mandate them to store their data only in India.

(Reporting by Neha Dasgupta; additional reporting by Clarence Fernandez in Singapore; Editing by Darren Schuettler and Martin Howell)

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