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Modi’s US Visit: Navigating Trade Tensions
Prime Minister Narendra Modi is set to arrive in Washington for crucial discussions aimed at averting a potential trade conflict with President Donald Trump. As tensions between the two nations escalate, India is contemplating reductions in tariffs across numerous sectors to mitigate the impact of US tariffs that could further hinder its already sluggish economy.
This meeting, scheduled for Wednesday, serves as a litmus test for the much-discussed camaraderie between Trump and Modi, which was characterized by warm exchanges and mutual admiration during Trump’s initial tenure. Trump has praised Modi as “the nicest human being,” while Modi has reciprocated with the title of “dear friend.” Both leaders harness populist sentiments, securing their leadership through a blend of anti-establishment rhetoric and nationalistic fervor.
Indian Foreign Secretary Vikram Misri highlighted the significance of this visit, noting that Modi’s invitation to the US came just weeks after the establishment of the new administration, emphasizing the importance of the India-US relationship.
Trump has expressed his discontent over India’s elevated tariffs, labeling the nation as a “very big abuser” and accusing it of restricting US imports. This dissatisfaction coincides with Modi’s two-day visit, which follows Trump’s recent announcement of a 25% tariff on steel and aluminum imports. The president has indicated that these tariffs could be just the beginning, hinting at possible levies on a range of other products including automobiles and chemicals, advocating for a system of “reciprocal tariffs.”
The implications of these metal tariffs have raised alarms within India’s steel and aluminum sectors, where businesses export goods valued at billions to the US annually. The Indian Steel Association projected that the new steel tariff could lead to a drastic 85% reduction in exports to the United States.
In response to these potential punitive trade measures, the Indian government has proactively decreased duties on various products, including luxury motorcycles like Harley-Davidsons. Additional tariff reductions are under consideration for items such as electronics, medical equipment, and wood pulp, many of which are sourced from the US.
Bilateral trade has been on an upward trajectory, exceeding $118 billion in the previous fiscal year, with India enjoying a trade surplus of $32 billion. While Trump advocates for a “fairer” trade relationship, India remains open to discussing a limited trade agreement to ease US concerns regarding market access.
Moreover, Trump has encouraged India to procure more US-made defense and energy supplies. With India distinguished as the largest arms importer globally, opportunities abound. The agenda will also include discussions on nuclear energy, particularly small modular reactors, as India aims to enhance its clean energy portfolio to meet its climate commitments. Reports indicate that negotiations for combat vehicle purchases and a fighter jet engine deal are already underway.
Another pressing topic is Trump’s initiative to combat illegal immigration. According to Trump, Modi has committed to taking appropriate actions regarding this issue. Following the recent deportation of 104 Indian migrants by the US, which stirred outrage in India—particularly over reports of harsh treatment—discussions will likely cover strategies for handling the return of additional Indian nationals.
Additionally, Modi is expected to advocate for the expansion of H-1B visa allocations, which are crucial for Indian professionals in the US IT sector. Trump has shown support for the H-1B visa program, which facilitates the entry of skilled foreign workers into the tech industry. While figures like Elon Musk champion the scheme for its role in fostering innovation, contrasting views from Trump’s inner circle, including Steve Bannon, argue that it displaces American labor.
As Modi embarks on this pivotal visit, he aims to reinforce the achievements of the US-India partnership, particularly in sectors like technology, defense, and energy, while primarily focusing on preventing an escalation of trade tensions into a protracted tariff war.
Source
www.theguardian.com