Trump moves his trade war to a new frontier as he kicks India and Turkey out of a $19 billion agreement

  • The Trump administration is winding down a trade agreement with India and Turkey, accusing India of erecting unnecessary barriers to trade.
  • The US trade representative’s office on Monday said the two nations would be removed from the US’s Generalized System of Preferences program, which allows certain goods to enjoy duty-free entry into the US.
  • President Donald Trump’s actions against India and Turkey come just as he and his administration take a more conciliatory approach to negotiations with China over trade.

The Trump administration says it is winding down a trade agreement with India after accusing the country’s government of erecting unnecessary barriers to trade with the US.

About $5.6 billion worth of Indian goods enjoy duty-free entry into the US under an agreement known as a Generalized System of Preferences.

The program effectively exempts India, and many other nations, from tariffs on certain goods exported to the US. India is by far the biggest beneficiary of the agreement, which has been in place in some form since the mid-1970s.

Other countries to benefit include Brazil, Indonesia, and Thailand, with exemptions covering about $19 billion worth of goods coming to the US each year, according to recent data.

President Donald Trump, however, has frequently criticized India for its high tariffs on goods imported from the US, and he has now given India notice of its removal from the GSP agreement.

India has a “wide array of trade barriers that create serious negative effects on United States commerce,” an announcement Monday from the US trade representative’s office said.

In a separate letter to congressional leaders, Trump set out his reasons for kicking India out of the program, saying:

“I am taking this step because, after intensive engagement between the United States and the government of India, I have determined that India has not assured the United States that it will provide equitable and reasonable access to the markets of India.”

India’s removal from the agreement will not be immediate, however, with trade officials saying it will take 60 days from the time when India’s government and the US Congress were formally notified of the action.

India’s government said that it had no plans to retaliate against the US’s actions and that there was little real benefit to the country in monetary terms from the agreement.

“India exports goods worth $5.6 billion under the GSP, and the duty benefit is only $190 million annually,” India’s commerce secretary, Anup Wadhawan, said, according to the Hindustan Times.

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The US government separately notified Turkey that it would be removed from the GSP agreement, with the administration citing the rapid growth of the Turkish economy since it was first admitted to the program as the main reason.

“In the 4 1/2 decades since Turkey’s designation as a GSP beneficiary developing country, Turkey’s economy has grown and diversified,” Trump said, adding that the country was “sufficiently economically developed” so as not to need beneficial access to US markets.

The letter also noted that Turkey already had support removed from similar programs put in place by other developed nations.

The actions against India and Turkey come just as Trump and his administration take a more conciliatory approach to negotiations with China over trade.

It has been reported this week that Washington is set to remove “most, if not all,” sanctions on Chinese products in return for Beijing trimming tariffs and other restrictions including on US farm, chemical, and auto products.