ASSESSMENTS

India Waits Warily for a U.S. Trade Salvo

May 17, 2019 | 09:00 GMT

A map of India is seen superimposed over the country's territory. In terms of tariffs against New Delhi, the ball's in America's court.

(HARVEPINO/Shutterstock)

Highlights

The prospects of a U.S.-India trade war — which would be marked by U.S. tariffs on a wide range of Indian imports — will hinge on the outcome of a possible U.S. investigation into India's trade practices.
India, which recognizes it's a lower priority in U.S. trade negotiations, will be more likely to negotiate a trade package once a new government is formed after its national elections conclude later this month.
If India chooses to continue buying Iranian oil, it will buy a reduced amount under a rupee-based payment mechanism to avoid U.S. sanctions.

There's nothing like a common rival to bring two powers together -- at least on defense. India and the United States, both eyeing China's rise with concern, are moving closer militarily. Their common strategic interest in countering China, however, does not mean an alignment on trade: The United States is pushing India to further open its markets to American commerce, halt its purchase of Iranian oil and ease recent e-commerce regulations that could impede foreign investment. The demands, in fact, have even fueled speculation that India could emerge as a new front in U.S. President Donald Trump's trade war. But with limited ability to retaliate, India will seek to avoid any larger trade disputes with the United States, a vital export market. Even so, the prospects for a confrontation will ultimately depend on how the United States chooses to act. Washington has shown it has no qualms about launching trade disputes...

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