White House

Trump escalates trade tussle with India, putting U.S. farmers at risk — again

‘We’ve been very good to our allies,’ POTUS says amid warnings of economic damage

Indian Prime Minister Narendra Modi addresses a joint session of Congress as then-Speaker Paul D. Ryan and then-Vice President Joe Biden, watch on June 8, 2016. Three years later, he is in a trade spat with President Donald Trump. (Tom Williams/CQ Roll Call file photo)

ANALYSIS — Of the many trade wars Donald Trump has launched since becoming president, his relatively quiet and in-the-weeds one with India had flown mostly below the radar. No more.

GOP lawmakers and analysts worry that those most impacted will be the American farmers who send nuts and fruits to India, as well the U.S. firms that export aircraft and machinery there. Voters who make a living in both sectors are already leery of Trump’s trade tactics, making an escalation with India dicey politics as he revs up his re-election campaign.

As he flew to Japan for a G-20 summit that will include a one-on-one meeting with Indian Prime Minister Narendra Modi, Trump put the leader of the country that ranks ninth in terms of U.S. trading partners on notice.

Trump and Modi are scheduled to meet privately Friday morning in Osaka, according to White House Principal Deputy Press Secretary Hogan Gidley. And when they do, Trump is now expected to press Modi to alter his country’s trading practices — or else.

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“I look forward to speaking with Prime Minister Modi about the fact that India, for years having put very high Tariffs against the United States, just recently increased the Tariffs even further,” Trump tweeted.

“This is unacceptable and the Tariffs must be withdrawn!” Trump tweeted, reacting to India’s January move to slap new import duties on 28 American-produced goods.

As he dined with Australian Prime Minister Scott Morrison on Thursday in Osaka, a reporter mused to Trump that his “America first” governing approach seems like “America alone” when it comes to trade and other foreign policy matters.

Trump, however, disagreed.

‘Good to our allies’

“I think I can say very easily that we’ve been very good to our allies. We work with our allies. We take care of our allies. … I’ve inherited massive trade deficits with our allies, and we even help our allies militarily,” he said, sitting across from Morrison with American and Australian flags aligned behind the rectangular table.

“We do look at ourselves … more positively than ever before, but we also look at our allies. And I think Australia is a good example. We’ve worked together very closely, just recently on a big trade situation,” Trump said. “We had a little bit of a trade deal going, and it worked out very well for both of us.”

But he didn’t mention India as tensions heat up.

The Indo-Pacific powerhouse made its move in response to the White House’s 25 percent steel and aluminum tariffs on other countries. And India’s move prompted the Trump administration to strip New Delhi of special trade privileges granted by the Generalized System of Preferences, which made India the country that benefited most from duty-free exports to the United States.

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The tariff tussle threatens to erode relations between two countries that, under presidents George W. Bush and Barack Obama, had moved closer economically and militarily as they both sought to counter China’s power in the Indo-Pacific region and beyond.

India and the United States engaged in $87.5 billion in total trade in 2018, according to U.S. Census Bureau data. That put India ahead of No. 10 Italy ($77.9 billion) and behind No. 8 France ($88.8 billion).

Like with Trump’s tariff war with China, his India tit-for-tat for New Delhi threatens to bring economic pain to his core supporters — making his Thursday threat a curious move for a first-term chief executive heading into a re-election bid in which he trails a handful of Democratic candidates in key battleground states, some of which are suffering from his trade policies.

GOP lawmakers who want the president to tamp down his trade rhetoric and move away from tariffs are likely frustrated by the move because it hurts farmers and manufacturing workers.

In 2018, the United States exported $1.5 billion worth of agricultural goods to India, making it the 18th-largest market for farm products, according to data compiled by the Office of the U.S. Trade Representative. American farmers sent $662 million worth of tree nuts, $329 million of cotton, $163 million in fresh fruit, $48 million of dairy products and $33 million of prepared foods to India last year alone, according to USTR.

The trade fight also is hitting manufacturing-heavy areas, which also helped Trump win the White House. American companies sent $3 billion in aircraft, $2.2 billion worth of machinery, and $1.6 billion in medial and optical equipment to India last year, according to the USTR.

When coupled with other things like services, U.S. exports to India were up 28.9 percent ($33.1 billion) in 2018, USTR found, making it the 13th-largest market for American goods and services.

‘Tariff Man’

Notably, independent and even conservative analysts have sharply questioned Trump’s trade practices, including his reliance on tariffs — which haven’t been in vogue since the William McKinley administration ended in 1901.

“Some trade economists and market watchers have suggested that the ... imposition of tariffs and retaliatory tariffs could be longer lasting because they have created uncertainty about U.S. trade policy behavior and have called into question U.S. reliability as a trading partner,” the Congressional Research Service said in a recent report.

Then there’s one analyst at the conservative American Enterprise Institute who has branded Trump with the derisive moniker “Tariff Man,” and warned “tariffs are a tax on U.S. consumers.”

“We already tax ourselves to belong to international organizations that are supposed to enforce trading rules, as well as to fund the U.S. military, the State Department, intelligence organizations and a legal system that has tools to enforce laws against industrial espionage,” AEI’s Mark Perry wrote in a recent op-ed.

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“All these institutions are better suited than Midwestern soybean growers to take on” other countries’ trade practices, he added.

And the nonpartisan Tax Foundation has concluded that Trump’s trade wars and retaliatory moves by other countries — including India — could soon slow a healthy economy he wants to make a major re-election selling point.

“If all tariffs announced thus far were fully imposed by the United States and foreign jurisdictions, U.S. [gross domestic product] would fall by 0.74 percent ($184.07 billion) in the long run, effectively offsetting about 44 percent of the long-run impact of the Tax Cuts and Jobs Act,” according to data compiled by the foundation. “Wages would fall by 0.48 percent, and employment would fall by 570,591 full-time equivalent jobs.”

One White House official was recently asked if escalating so many trade wars was a good idea going into what is shaping up to be a tough bid for a second term. The official looked down thoughtfully, and then shrugged.

“I don’t know, man,” the harried official said. “I’ve got to get to a meeting. I'll get back to you on that.”

No response ever came. But Trump’s latest threatening tweet did.

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