India-US Bilateral Trade Agreement (BTA)

Experts emphasize the need for India to secure a watertight bilateral trade agreement with the US to prevent arbitrary tariff increases. This follows the US's imposition of 25% tariffs on imports from Mexico and Canada, and increased taxes on Chinese goods.

Implications of US Tariff Policies

• India must safeguard its exports from increased competition in other markets where diverted Chinese goods may pose a threat.
• Increased tariffs on Chinese gems, jewellery, and smartphones could positively impact Indian exports in these sectors to the US.

Need for Stringent Safeguards

• Experts suggest ensuring that the India-US BTA includes strict measures to prevent any future withdrawal or misuse by the US.
• Examples such as replacement of NAFTA by USA with the US-Mexico-Canada FTA show the necessity for these safeguards.

Alternative Trade Proposals

• India might propose a zero-for-zero tariff deal where both countries eliminate tariffs on industrial products, instead of a full Free Trade Agreement (FTA).

Global Trade Dynamics

• Following the US's tariff increase, China retaliated with additional tariffs on American agricultural and food imports, escalating trade tensions.
• India needs a strategy to counteract China's potential aggressive market diversions due to these higher tariffs in the US.