Donald Trump Opens Another Front in Trade War—With India and Turkey

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India's Prime Minister Narendra Modi and President Donald Trump during a meeting in the sidelines of the G20 Leaders' Summit in Buenos Aires, on November 30, 2018. President Donald Trump has set the stage for another tariff standoff, this time with India and Turkey. SAUL LOEB/AFP/Getty Images

Just as the U.S. seemed on the cusp of ending its internecine trade war with China, President Donald Trump has set the stage for another tariff standoff, this time with India and Turkey.

The Office of the United States Trade Representative said in a statement on Monday that Trump and Trade Representative Robert Lighthizer had stripped India and Turkey of their preferred trade status because they were no longer eligible.

India, the world's fastest-growing economy, was removed from the United States Generalized System of Preferences because it had "implemented a wide array of trade barriers that create serious negative effects on United States commerce," according to the statement. The decision by the Trump administration came "despite intensive engagement," on the issue, it added.

Reuters reported that the move by Washington was the most punitive measure taken against India since Trump took office. Trade ties between the U.S. and India have suffered because of India's new e-commerce rules that hampered business for U.S. internet retail giants such as Amazon and Walmart-backed Flipkart.

New Delhi has also sought to strong arm card payment companies such as Mastercard and Visa into moving their data to India, while imposing tariffs on goods such as smartphones, to the displeasure of the United States.

India will not fight the U.S. on the Generalized System of Preferences removal. "GSP is more symbolic of the strategic relationship, not in value terms," a government official told the news agency on condition of anonymity.

Monideepa M. Mukherjee, a spokeswoman for India's commerce ministry, told The Associated Press that India had essentially outgrown the zero-tariffs status given to developing nations as a catalyst to growth. "The GSP benefits will go, the U.S. will not relent on this," said Mukherjee. "It's meant for least-developed countries, and India has graduated out of that."

The savings on tariffs offered by the GSP amounted to only $190 million a year. India's economy, the sixth largest in the world, with a GDP of $2.6 trillion, according to the IMF, is slated to outstrip its rivals in Europe in the coming decades.

Turkey has said the decision to remove it from the GSP would hurt American small- and medium-size enterprises and manufacturers, slamming the decision by the United States. But the country has said it would look to press ahead with efforts to increase trade. It hopes to reach a threshold of $75 billion "without losing any momentum," the country's minister of trade tweeted Tuesday.

At the end of February, Trump tweeted that he would delay an increase in tariffs on Chinese goods. What the president referred to as "substantial progress" in trade talks with Beijing appeared to signal the beginning of the end of a trade war between the United States and China that had cast a shadow on global markets, with Trump threatening a 10 percent to 25 percent increase in tariffs on $200 billion worth of Chinese exports.