In US President Donald Trump’s lexicon, 2+2 does not exactly add up to 4, as long as trade deficit persists! Days after the 2+2 dialogue between the foreign and defence ministers of India and the US in New Delhi, the famously transactional Trump has taken a swipe against growing economies like China and India for taking undue advantage of US’ subsidies. In his trademark dramatic flourish, Mr Trump described the US as a “developing economy”! Clearly, Mr Trump knows how to dramatize and hog headlines. In his bestselling book, “The Art of the Deal,” Mr Trump has said famously that bad publicity is better than no publicity at all.
“We have some of these countries that are considered growing economies, they are considered nations that are not mature yet so we are paying them subsidies,” Trump told supporters at a rally in Fargo, North Carolina. “The whole thing is crazy”.
“You know, like India, like China, like others, we say ‘oh they are growing’ so I say I want to put us in that category, too we are growing… they call themselves developing nations… we are a developing nation too.”
“…they get subsidies, we pay them money… but we are going to stop it. We have stopped it.”
Who was Trump targeting? India or China?
Mr Trump’s allusion to subsidies was not entirely clear, but it was probably a reference to the Generalized System of Preferences (GSP), a trade programme under which the US eliminates duty on thousands of products it imports from 120 beneficiary countries that are considered developing. India is among the programme’s top beneficiary, with an estimated $5 billion worth of duty-free exports to the US in 2017. The US has initiated a review of India’s eligibility to continue as a beneficiary, along with other countries.
His remarks targeting growing economies like India and China are expected to resonate with his white working-class constituency, but is likely to raise a lot of eyebrows in India, specially after a reasonably successful 2+2 dialogue in New Delhi on September 6.
The 2+2 dialogue saw India and the US taking a slew of initiatives to operationalise New Delhi’s status as US’ Major Defence Partner. Besides signing of the Communications Compatibility and Security Agreement (COMCASA), which will bring India and the US in a tighter strategic embrace, the outcomes in the area of defence included the decision to set up a hotline between defence and foreign officers of the two countries, the creation of a new, tri-services exercise and the signing of a pact on enhanced collaboration in the area of defence innovation.
“These remarks by Trump should be taken with a pinch of salt and should be seen as his typical attention-getting tactic as the US president has elevated India’s status in the US’ foreign policy calculus by forging close strategic collaboration in the Indo-Pacific and positioning New Delhi as a factor of stability in the Af-Pak region,” said Manish Chand, Editor-in-Chief, India and World, an influential magazine focused on international affairs.
“Although President Trump mentioned India and China in the same breath, his primary target was China with which the US has a mammoth trade deficit. In fact, China’s trade surplus with the U.S. has soared to a record $31.05 billion in August this year,” he said. Compared to China’s, the US trade deficit with India is only around $24 billion. With defence exports of around $5 billion to India already in the pipeline, the US trade deficit with India is set to come down further in days to come.
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