December 17, 2018

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In U.S.-India Trade, Trump Sees Only Harley-Davidson

In U.S.-India Trade, Trump Sees Only Harley-Davidson
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The items targeted influential industries such as almond growers, who last year shipped $651 million of the nuts to India, their largest market. But India deferred the start of the tariffs from June to September and then to Nov. 2. The government may well delay the tariffs again, Mr. Chaulia said, to assess the outcome of Tuesday’s midterm elections in the United States and what effect that would have on the American negotiating position.

India, for its part, wants the United States to reduce tariffs on its exports of clothing and textiles, for which it pays higher duties than neighboring countries like Bangladesh and Pakistan. The Modi administration is also adamant about maintaining its hefty subsidies for homegrown agricultural products to court Indian farmers, who are a key voting bloc.

Looming over everything are geopolitical concerns.

In addition to continuing oil purchases from Iran, Mr. Modi signed a deal with Russia’s president, Vladimir V. Putin, on Oct. 5 to buy Russian S-400 antiaircraft missile systems. The $5.2 billion purchase violates American trade sanctions against Russia and will eventually trigger penalties for India unless Mr. Trump approves a waiver.

Officials in the State and Defense Departments are urging Mr. Trump to give India some leeway on both issues as part of an effort to forge a closer military and diplomatic partnership against China in the region. India has already reduced its reliance on Iranian oil, they argue, and the American defense contractors Lockheed Martin and Boeing are hoping to land a military jet order from India that could be worth $15 billion.

Trade experts predict that neither country will be quick to antagonize the other.

“Under no circumstance would the Indian government give up its close relationship with the U.S. government,” said Biswajit Dhar, a professor of economics at Jawaharlal Nehru University in New Delhi who has represented the Indian government on trade issues and formerly served on the board of the Export-Import Bank of India.

Mr. Chaulia said India was also clear about its economic commitment to Iran. India has invested heavily there, including hundreds of millions of dollars in the seaport of Chabahar in southeastern Iran. The Trump administration wants a regime change in Iran — and India does not, he said.

Eliminating the Harley tariffs is a way to ease the trade drama and please the American president, Mr. Chaulia said. “All Trump needs is to declare a win,” he said. “He doesn’t care about the nitty-gritty.”



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