US Trade War Heats Up
By Shivaji Sarkar
While India is concerned about high-tech and high-volume trade with the United States under the new Donald Trump administration, certain imports, such as dry fruits, which have surged by a remarkable 93 per cent of the global share, have largely gone unnoticed and caused little reaction.
India’s concerns about trade and tariffs with the US have grown as rising imports from the US are impacting various sectors of the Indian economy. The trade relationship between the two countries has become increasingly complex, especially after the US imposed tariffs on products like steel and aluminium. India has expressed worries over the potential long-term impact of these tariffs, which could hinder the growth of its manufacturing sectors and disrupt its trade balance.
None, however, had expected that Afghani Kabuliwala or the neighbouring Iran, prime supplier of nuts, would be replaced by the US with its low oil-content and less nutrient almonds, walnuts or pistachios. The fad for larger sized nuts has caught the fancy of Indian health-conscious buyers aided by low Indian tariffs. The US is virtually doing a Chinese dragon in electronics in this area. India’s import of nuts crosses over $ 1 billion last year. Buyers with swadeshi fad are unaware that they are consuming larger-looking lower quality product than what used to come from the neighbours.
India has been witnessing a significant increase in imports from the US, especially in sectors like agricultural products, technology, and pharmaceuticals. While these imports haven’t caused widespread alarm yet, their growing volume has raised questions about the future of India’s domestic industries, particularly in sectors that are facing increasing competition from cheaper or subsidized imports. Some nut supplies are coming from Australia, about 7 to 29 per cent, as well following the recent trade deals.
The import surge is commensurate with rising demand and limited indigenous production. The indigenous production is about 4150 tonnes of almond alone during 2024-25 but the demand has increased manifold. The imports are estimated at 1.9 lakh tonnes as per US agriculture department.
The Georgia-based GTRI says that almonds import by India soared over 5.5 times since 2008. Pistachio imports went up 4,400 tonnes to 13,500 tonnes in 2021. Of total almonds imports of $940.8 million (mn), $868.2 mn, 92.3 per cent comes from the US; of total $141.5 mn pistachio, $121.2 mn is from the US (86.7 per cent) and a miniscule 8.8 per cent is from Iran. While of the shelled pistachio of total $72.2 mn, $8,5 mn from the US and 34 per cent comes from Afghanistan; 41.1 per cent shelled walnuts come from Afghanistan and 78.5 per cent comes from Chile and only 16.9 per cent or $ 86.6 mn of total walnuts imported, $ 14.6 mn emanates from the US.
The US strategists have been working through different regimes since the Indo-US nuclear deal in 2007. The political and diplomatic aggression of Trump is part of a well-oiled strategy. So, it is not restricted to electric vehicles (EV) of Elon Musk that Trump has termed as virtual junk, batteries and other hi-tech products but even simple farm and other products are being targeted for large-scale entry to India.
Various US departments are diligently working on raising US exports. It is just not the Trump regime that has ushered in aggressive strategy. Most of the increases in such farm goods happened with the US administration working out the tariffs even during the Joe Biden regime. For the last over a decade, different US agencies have worked out methodologies to increase the different kinds of exports to the developing and even European Union markets. It includes pressurisation for working out lower tariffs and other facilitation for the US goods.
In September 2023, India lifted retaliatory tariffs on US almonds, apples, chickpeas, lentils, and walnuts, which were imposed in 2019. This tariff reduction has restored and expanded market opportunities for US agricultural producers and manufacturers, particularly for tree nuts like almonds and walnuts.
Donald Trump has been calling India repeatedly ‘tariff king’. In an interview a few days back he told a US website, Brettart news, “I have a very good relationship with India, I believe they are going to probably lower those tariffs substantially, but on April 2, we will be charging the same tariff as they charge us”. India is going to be coerced further to allow rich America’s goods to India at low negligible tariffs.
The Foreign Agricultural Service (FAS) of the U.S. Department of Agriculture (USDA) has primary mission to enhance export opportunities for U.S. agriculture. It now estimates that U.S. almond exports to India could soar in 2024-25. The U.S. apple exports, which were most affected by the retaliatory tariffs, have the potential to climb from $4.8 million in 2022 to $50-$80 million.
It’s an all-round war. With scant US respect for multilateral agencies like the World Trade Organisation and United Nations, arm-twisting is easier, and it is not restricted to F-35 stealth fighters, which India has little need. The FAS type organisations’ strong marketing campaigns have helped American almonds secure a significant market share in India with pop-up of US goods on e-market sites. American suppliers benefit from better logistics and a well-organized supply chain. Indian systems are fragile and fragmented.
Th surge in imports is despite assertion by India’s Commerce Secretary Sunil Barthwal, to a parliamentary panel on March 10, that talks are still going on and no agreement has been reached on trade tariffs. He also agreed that India had said it was deepening trade ties with the US. It translates into more concessions and opening up doors to the US goods.
The US has studied and carrying out campaigns subtly projecting the US products, including dry fruits as superior health products. Despite the Asian products being superior with high oil contents, nutrients and lower prices American products are being sold as better for the size, not taste. The US agencies have rebranded products to place Californian goods pop up on e-marketing sites luring health-conscious Indians.
India has to rethink its moves to counter the trade aggression for keeping its market intact and check imports. It is easier said but countering a powerful US, which deports Indian illegal immigrants in shackles and handcuffs, though not Pakistanis, requires skill, multiple studies and working through international agencies. India has to reorient its several strategies, including diplomacy. — INFA