India retaliates to US tariffs, hikes import duty on 29 US products

In a retaliatory move to the heavy tariffs imposed by the United States on imported steel and aluminium items, India has decided to raise customs duty on 29 US products including almond, walnut and pulses. The duty hike by India would have equivalent tariff implications for the US.

Created On: Jun 22, 2018 13:23 IST
Representative Image
Representative Image

In a retaliatory move to the heavy tariffs imposed by the United States on imported steel and aluminium items, India has decided to raise customs duty on 29 US products including almond, walnut and pulses.

The duty hike would come into effect from August 4, as per a notification from the Union finance ministry.

Key Highlights

While import duty on walnut has been hiked to 120 per cent from 30 per cent, the duty for shelled almond has been increased to Rs120/kg from Rs 100/kg earlier.

The import duty on chickpeas, Bengal gram (chana) and masur dal has been increased to 70 per cent from 30 per cent earlier and that on lentils has been hiked to 40 per cent from earlier 30 per cent.

Further, apples imported from the US will attract customs duty of 75 per cent as against 50 per cent earlier.

The import duty on boric acid and phosphoric acid has also been hiked to 17.50 per cent and 20 per cent respectively from earlier 10 per cent each.

The import duty on diagnostic reagents has been doubled to 20 per cent, while the duty on binders for foundry moulds has been hiked to 17.5 per cent.

The duty on flat-rolled products on iron has also been raised to 27.50 per cent from 15 per cent earlier, while the duty on certain flat-rolled products on stainless steel has been increased to 22.50 per cent as against earlier 15 per cent.

The customs duty on Artemia, a kind of shrimp, has also been raised to 30 per cent.

For automobiles and earth moving equipment, SIM socket/other mechanical items (metal) for use in the manufacture of cellular mobile phones, the duty has been hiked to 25 per cent from earlier 15 per cent.

Background

Last week, India had submitted a list of 30 items to the World Trade Organisation (WTO), on which it proposed to raise customs duty by up to 50 per cent.

In the notification, however, there is no mention of duty hike on motor cycle with engine capacity of over 800cc.

As per the list India submitted to the WTO, it had proposed to hike customs duty on specified motorcycles, which included Harley Davidson, to 50 per cent.

The higher customs duty would come into effect from August 4, 2018.

Beginning of a new trade war?

The duty hike decision by India is similar to that of the European Union and China which decided to levy higher import duties on a variety of US products in retaliation to the protectionist policies adopted by America.

The decision was taken in retaliation to the unilateral increase in tariff by the US on certain steel and aluminium products earlier this year.

On March 9, US President Donald Trump imposed heavy tariffs on imported steel and aluminium items.

According to India, the duty hike imposed by the US has affected Indian steel exports by USD 198.6 million and aluminium shipments by USD 42.4 million.

The duty hike by India would have equivalent tariff implications for the US.

India exports steel and aluminium products worth about USD 1.5 billion to the US every year.  India's exports to the US in 2016-17 stood at USD 42.21 billion, while imports were USD 22.3 billion.

Meanwhile, the European Union has also slapped tariffs on iconic US products including bourbon, jeans and motorcycles in its opening salvo in a trade war with President Donald Trump.

 

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