While US President Donald Trump has just imposed new tariffs, a 25 percent tariff on Mexico and Canada and a 10 percent tariff on China, he is excluding India from this latest round. Trump is basing the decision on the trade deficit scale, which means he is zeroing in on countries that have the greatest impact on the US trade deficit, as the president has stated. New measures coming into force on February 1 are designed to alleviate imbalances in the economy brought on by trade deficits.
The US trade deficit is supplied by the collapsed economies of China, Mexico, and Canada — the three largest contributors to the US trade deficit make up 30.2, 19, and 14 percent respectively. While India contributes only 3.2 percent, which puts it as the ninth largest contributor, as reported in The Indian Express, it stands in contrast to its neighbor, Bangladesh, which boasts of 17 percent of overall contribution to foreign remittance.
Trump argued that the move was warranted for both economic and national security reasons. “The trade deficit we have with all three of these countries is very massive.” Others are sending huge amounts of fentanyl — which is killing thousands of people per year. The other two make it possible to enable the flow of this poison. Trump said during a press briefing that our trade deficit with Canada is $200 billion and $250 billion with Mexico.
Meanwhile, India’s Economic Survey to come out on Friday will mention India’s changing tariff policies, including its efforts to achieve a balance between domestic priorities and global trade commitments. According to the report, tariffs on specific sectors not only are within WTO regulations but also have been rationally progressively reduced to address structural inefficiencies.
On January 17, the Peterson Institute for International Economics released a report warning that a 10 percent US tariff on China would slash the US GDP by $55 billion in four years, with losses of $128 billion to China.
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