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🔥 Thread about Trump visiting Modi. This could be an “Indian Reset”, diplomacy that reshapes geopolitics, finance, trade & defense.
"News" won't tell you if the result is good, but we can count on them to tell us anything bad, so here's the explain'r. And, kirtan
Let's begin...
On February 24/25, 2020 Trump will visit India.
“There will be five to seven million people just from the airport to the new stadium” Trump

Background

U.S. tariffs are among the lowest in the world. We have “free trade” and low barriers, other countries don’t.
Mercenary pundits and experts are diffusing the propaganda of our enriched trading partners, they authoritatively recite trade disasters in America’s distant past. Reality is quite different…
In 2017, when Trump entered office our trade imbalance with India was disastrous. Trump called them the “Tariff King”
in 2018-19

India’s exports to the US was $52b, imports were $35b
Trade deficit dropped from $21b in 2017-18 to $17b in 2018-19, largely due to India’s purchase of US oil, natural gas and coal. A bigly and neglected benefit of Trump’s energy policies. bit.ly/2SZrHdS
In 2019, the Trump administration directed a rules change to remedy a cheat, nearly 2/3 of WTO members have been receiving special treatment by designating themselves as developing countries. An honor method that corresponded with loose/unenforced metrics bit.ly/3c7mpWy
Trump terminated the preferential trading status of $5b of Indian exports under Generalized System of Preferences (GSP) a program benefiting developing economies. India was largest beneficiary and had failed to make their markets "equitable and reasonable" bit.ly/39YfBs7
In 2020, Trump removed India from its list of countries that are exempted from Section 301 investigations into whether they harm American industry with unfairly subsidized exports. This is the same heavy lever he used with China
politi.co/2uWJkDj
Section 1: What does Trump and the U.S want

Abbreviated: the American side wants the removal of price caps (Trade Margin Rationalization) for its agriculture, dairy products and to remove the 20% tariffs on Information and Communications Technologies (ICT) products.
Case by case:

ICT. The US has said that its exports of these goods to India were valued at about $500m and that despite India’s commitment not to charge any duties on these products, India has been applying duties ranging from 7.5% to 20%.
Automotive products. India imposes 50% tariffs on motorcycles, automobiles are 60%

Alcoholic beverages have a 150% tariff
theatlantic.com/international/…
Dairy: U.S has been constrained from selling its dairy products because India requires that dairy “derived from a dairy cow that has been fed a vegetarian diet for its entire life.” India defends its position on religious and cultural grounds
Medical equipment: India has imposed large duties on medical equip/ devices

Poultry. India’s chicken consumption is largely imported chicken legs, but India banned them in 2007/precaution against avian flu. US domestic market prefers chicken breast, creating problem of surplus
Digital Economy. Many U.S. co's have back-office operations in India, platforms with half a billion internet users, generating enormous data. Modi called it “new oil” and wants to capture the value from the data and has imposed expensive regulatory/compliance costs for US co's
Section 2: What does India want?

Information and Communications Technologies: India fears that eliminating tariffs on ICT products invites Chinese companies to come in and flood their markets.

Generalized System of Preferences (GSP) program resumed
Agricultural products

Easier access to US markets for the export of mangoes, grapes, pomegranates, etc
Facilitation of processes in agricultural product markets where it already had access
Easier certification of food product irradiation facilities
Relief from duties on certain steel and aluminum products

Visas in Services Trade

India considers the “movement of natural persons,” as a “services” trade.
For the US, these are immigration matters that cannot be negotiated in trade deliberations bit.ly/2T8oDfq
Section 3: Defense

Obama largely denied India as a US Defense industry client on the odd grounds they it would alter the balance of power with Pakistan. India increased its purchases and dependence on Russian made equipment, technology and services.
Since 2017, Trump has offered India armed drones, integrated air, missile defense, and the sale of ‘sensitive technology’…

Air defense systems

In 2020 US approved a Foreign Military Sale to India of an Integrated Air Defense Weapon System (IADWS) for an estimated cost of $1.9b
Helicopters

In 2019, India signed a $3b contract w/Boeing for the purchase of 22 AH 64E BlockII Apache attack and 15 CH-47F Chinook heavy-lift helicopters
India recently announced purchase of 24 multi-role helicopters, MH-60R Seahawks for $2.5 billion.
bit.ly/37IFJpy
Planes

Boeing is offering its F-15EX fighter jets to India. This might lock up $18b contract to procure 114 fighter jets, Boeing’s Super Hornet is already in contention. India is also planning to procure 57 carrier-borne aircraft.

Navy

Trump approved $1b sale of 13 naval guns
Section 4. Make America Great Again meets Make India Great Again

Energy:

India, as an energy consumer since 2017 has begun strongly diversifying its energy imports from Iran and Saudi Arabia, and increasing its portfolio of US energy imports.
India needs next generation nuclear energy and the infrastructure to support it, something they had plotted for with Westinghouse but fell part, increasing their need for coal. with Trump administration approval Westinghouse can still supply, will they? bit.ly/38OoS5T
Medical devices: Permit American manufacturers of medical devices to establish manufacturing facilities in India and remove pricing controls

Digital

India has avoided giving any precision to its proposed digital/date governance regime.
Generalized System of Preferences (GSP)

An agri deal could help restore some of India’s GSP benefits and U.S. could graduate India back into the GSP bit.ly/2VaHl91
ICT: India might reduce tariffs on Information and Communication Technologies’ products. India is concerned that removing these tariffs could open up the market to a flood of Chinese products. India enforcing tighter trade balance with China could remedy this
Trade and American investments into India.

Sino-US tariffs may become the new normal, a syndicate of other countries will take up that slack as the global manufacturing base.
As more foreign investment and technology flow to other nations, China’s chances of becoming a technologically advanced, innovative economy will end, a strategic goal of the U.S. India needs to anchor this.
India might further reform Foreign Direct Investment (FDI) rules. This will also allow India to capture the diversion in investment flows as manufacturers seek alternative origination destinations.
A boost to India’s economy:

India identified 203 products where exports to US could be increased by replacing Chinese exports as it already has market access for these items and is a competitor of China.
Ultimately, the big fish is also producing the world’s pharmaceutical ingredients, a monopoly China holds on.cfr.org/32ky3ca
More boost to India’s economy

India can help resolve a deception that China is using called “knockdown” – taking apart a product into its components and reassembling them outside China to avoid tariffs and duties.
bit.ly/3bWyqxV
India is the most desirable swap for China, with an assist its supply chain, it can be quickly scaled up, made bigger and denser and more efficient than its rivals. Currently, demand is beyond India’s existing capacity.

You’re up to date, may the force be with you 🇺🇸🇮🇳
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