India is likely to delay the imposition of retaliatory tariffs on US goods. Incensed by the American refusal to exempt it from the new tariffs, India had decided in June to raise import tax on some US products from August 4. The US wants to reduce its trade deficit with India. The country’s US export growth has consistently declined till May. It fell from a 21.49 per cent growth rate in January to 19.50 per cent in February, 14.75 per cent in March, 13 per cent in April and 11.38 per cent in May.

India’s share in the US’ total goods imports is two per cent and five per cent in services. In contrast, the US’ share in India’s goods imports is five per cent and 15 per cent in services imports. India is also hopeful of securing exemption from the US regarding steel and aluminium tariffs, which had been imposed earlier by the US against all trade partners.

Tariff hikes raise new trade barriers, make domestic manufacturing more attractive as the steep increases in customs duties make imports unaffordable. For agri products such as pulses, which have witnessed an increase from 30 per cent to 70 per cent, this would provide encouragement in increasing the cultivable area, on the back of good pulse production in recent years in India.