India not abusing tariffs, Trump’s claims unfair, says GTRI

New Delhi: Former US President Donald Trump’s recent statements that India is “abusing” import tariffs are unfair as many countries, including the US, protect their domestic industries by imposing high tariffs on certain products, think tank GTRI said on Friday.

According to the WTO’s 2023 World Tariff Profiles, the United States also imposes high tariffs on products such as dairy products (188%), fruits and vegetables (132%), coffee, tea, cocoa and spices (53%), grains and food preparations (193%), oilseeds, fats and oils (164%), beverages and tobacco (150%), fish and fish products (35%), minerals and metals (187%), and chemicals (56%).

These figures demonstrate that the United States also protects specific products in its economy with high tariffs, the GTRI said in a report.

Although India imposes high tariffs on some products, including wines and automobiles, the Global Trade Research Initiative (GTRI) has argued that these figures do not represent the overall tariff landscape.

“Trump’s argument singles out products subject to the highest tariffs while neglecting average and trade-weighted tariffs that better represent India’s trade policy,” he said.

On September 17, Trump called India an “abuser” of import tariffs, a claim that echoes his October 2020 statement calling India the “tariff king.”

“While it is true that India imposes high tariffs on some products, Trump’s argument misses the essential context, which makes his accusations unfair,” said GTRI founder Ajay Srivastava, adding that many countries protect their domestic industries by imposing high tariffs on certain items.

India’s average tariff rate of 17% is higher than that of the United States (3.3%), but similar to other major economies such as South Korea (13.4%) and China (7.5%).

He also said India has demonstrated its openness to free trade by removing customs duties on imports from FTA (Free Trade Agreement) partners such as ASEAN (Association of Southeast Asian Nations), Japan and South Korea.

“However, despite India’s willingness, the US has been reluctant to reduce tariffs through free trade agreements. This hesitancy is evident in the Indo-Pacific Economic Framework, where no tariff reductions have been included, reflecting the US’ cautious approach,” Srivastava said.

If the US wants tariff-free access to the Indian market, it should consider negotiating a free trade agreement with India, he added.

“While India needs serious tariff reforms, the ‘tariff king’ tag does not hold water when compared to the pricing practices of the US and other major economies,” he added.

He also said that Trump does not talk about average tariffs, but identifies the products on which the highest tariffs are applied by India.

“For example, on January 24, 2019, he said that India was imposing a high import duty of 150% on American whiskey. Indeed, India imposes high duties on many items. 150% on whiskey and wines, 100-125% on automobiles. But India is not alone in doing so,” the GTRI said.

In fact, according to the study, most countries apply high tariffs on a few products, such as Japan (457%), Korea (887%) and the United States (350%).

Explaining the reasons behind these high duties, Srivastava said most countries impose high tariffs on a few items for a reason.

“Japan may want to protect its rice farmers, the United States its tobacco producers, and India its growing wine industry. However, the items subject to high tariffs do not represent the tariffs at which most items are actually traded. The average tariff and the trade-weighted tariff better represent a country’s tariff profile,” he added.