US may withdraw zero tariffs for India

President Donald Trump has called out India for its high tariffs. He has pushed for US manufacturing to return home as part of his 'Make America Great Again' campaign.

India could lose a vital US trade concession, under which it enjoys zero tariffs on $5.6 billion of exports to the United States, amid a widening dispute over its trade and investment policies, people with close knowledge of the matter said.

A move to withdraw the Generalised System of Preferences (GSP) from India, the world’s largest beneficiary of a scheme that has been in force since the 1970s, would be the strongest punitive action since President Donald Trump took office in 2017 vowing to reduce the U.S. deficit with large economies.

Trump, for his part, has pushed for US manufacturing to return home as part of his Make America Great Again campaign.

The trigger for the latest downturn in trade ties was India’s new rules on e-commerce that restrict the way Amazon.com Inc and Walmart-backed Flipkart do business in a rapidly growing online market set to touch $200 billion by 2027.

That, coming on top of a drive to force global card payments companies such as Mastercard and Visa to move their data to India and the imposition of higher tariffs on electronic products and smartphones, left a broader trade package the two sides were working on through last year in tatters.

The U.S. Trade Representative (USTR) was completing a review of India’s status as a GSP beneficiary and an announcement was expected over the next two weeks, the sources said.

India and the United States have developed close political and security ties. But bilateral trade, which stood at $126 billion in 2017, is widely seen to be performing at nearly a quarter of its potential.

U.S. Commerce Secretary Wilbur Ross is due in New Delhi next week where he is expected to raise concerns about the e-commerce policy and data localisation, officials said.