US tariff threat puts exporters on the edge

New Delhi: The impact of potential new tariffs on Indian exports under the US' Lindsey O Graham Sanctioning Russia and Iran Act can be assessed only after Washington announces the actual levies, product coverage and implementation timetable, said trade watchers.

The US Congress passed the Act Wednesday allowing sanctions on Russia's crude exports and tariffs of up to 100% on India, China, and other major buyers of Russian energy. The bill will now be sent to US President Donald Trump for his assent.

Experts cautioned that Washington can weaponise the new Act for an unequal trade agreement with India and can still take future action under Section 301, sectoral measures or other trade laws against New Delhi, similar to its moves against the EU, Japan and South Korea. "This is a cause of concern as it adds to uncertainty," said Ajay Sahai, director general, Federation of Indian Export Organisations (FIEO). "It also raises questions at the viability of those exports which are subject to 100% tariffs."


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Apparel Export Promotion Council chairman A Sakthivel said the law is a tool with the US to pressure India to reduce tariffs on American goods. Exporters said some front loading of shipments may happen if the tariffs are actually imposed. "We are monitoring the situation," said an official. Sanjay K Jain, managing director at TT Ltd, said the law gives leverage and legislative backing to Washington to impose tariffs. "However, the US is facing high inflation, and any such move will add fuel to fire besides causing uncertainty," he said. Think-tank GTRI cautioned that the US will now proceed to threaten India with tariffs of up to 100% and eventually offer a lower rate if New Delhi cuts Russian oil purchases and accepts concessions under a deeply unequal bilateral trade deal.