Two Can Play. Increased tariffs on a moderate range of products go into effect on June 16. The move came shortly after the U.S. ended India’s participation in a preferential trade program.
From a total of $142 billion exchange, India had a $21 billion trade surplus with the U.S. in 2018. Higher tariffs (from an average of 7%) on imports was put on agenda when the Trump administration increased import duties on Indial steel and aluminum last year. The U.S. exempted India later, and the latter mutually deferred the implementation of higher tariffs on some imported goods.
Tensies have been rising again since the Trump administration locked out India from the preferential trade program of the U.S. from June 5. The new import duties affect apx. $6 billion worth of Indian products.
The counter move of New Delhi is hardly proportional but can be considered as measured. The World Trade Organization estimates that the retaliatory (as high as 70% in some cases) tariffs may be applied on products worth around $241 million.
Nevertheless, the tariffed goods (crops and fruits like lentils, chickpea, apples, almonds, etc) are coming from the rural, agricultural areas of the U.S. where the Republican party is traditionally strong. Groups of American farmers have already expressed their complaints that the tariffs imposed by India are hurting their business.
The other main targeted sector is the American export of medical equipment (pacemakers, surgical tools, coronary dents, etc). India imports around 80% of its requirement and a fourth of that (amounting to $9 billion+) comes from the US. The total duty on medical equipment was 20,4%. It has been cheaper to buy import devices instead of locally made equipment.