How Russian Missiles, Iranian Oil and Tariffs on Harleys Are Impacting US Ties With India

New Delhi: On the very day the US postponed the maiden 2+2 Dialogue with India for the second time, a bilateral summit between US President Donald Trump and Russian President Vladimir Putin was confirmed.

Kremlin foreign policy aide Yuri Ushakov was reported to have said that the summit would be held in a mutually convenient third country.

The move is significant as India-US ties have been strained due to New Delhi’s closeness with Moscow on defence deals.

The US had announced sanctions in January against Russia under its Countering America’s Adversaries Through Sanctions Act (CAATSA) for its role in the US elections two years ago.

Under CAATSA, the Trump administration is authorised to take stringent action against countries that engage with Russia significantly.

The US Congress is currently debating whether or not to impose sanctions on India over its purchase of the S400 air defence systems from Russia.

India has vowed to continue buying defence supplies from Russia, including S-400 air defence missile system.

Defence minister Nirmala Sitharaman has previously said that the relation between India and Russia was a “time-tested” one, something that New Delhi had conveyed to Washington.

TRADE WARS

India and US have improved convergence on defence, security and other strategic issues, but the economic relationship is headed for a rocky patch with the Trump administration threatening a tariff conflict.

“We have countries where, as an example, India, they charge up as much as 100 per cent tariff. We want the tariffs removed,” Trump said on Wednesday.

Trump has repeatedly targeted India over alleged unfair trade practices. The US president threatened to stop all trade with India because of its 60-70% tariffs on the high-end motorcycles from Harley Davidson.

Sources in the know-how said that the trade war was meant to be a talking point in the now scrapped 2+2 dialogue.

While Trump said he was defending the company, Harley Davidson recently announced its plans of moving some of its production outside of the US.

Harley decided to move out of the US after European Union imposed tariffs in response to Trump’s earlier tariffs on steel and aluminium. The motorcycle manufacturer hasn’t announced where it will be moving its production but speculation is rife that India is the top destination.

After Trump’s scathing remarks on the high tariff, India reduced the taxes on the motorcycles to 50%. The US President was, however, still not happy. He wanted India to reciprocate what the US does and “impose zero tax on import of motorcycles.”

OIL WOES

Given the huge energy needs, India and China are major importers of Iranian oil with India being the second largest buyer of Iran’s crude oil and Beijing being the third. Besides, Iran is India’s third largest oil supplier.

In a diktat issued two days ago, the US told India and other countries to cut oil imports from Iran to “zero” by November 4 or face sanctions. The Trump-led administration made it clear that there would be “no waivers” for anybody.

India’s stand has always been that the only sanctions it will adhere to will have to come from the United Nations.

A recent report by the Congressional Research Service also reiterated the same.

The report had further said considering India’s stand, it was “likely that India would resist US efforts to compel it to comply with the US sanctions on Iran, such as those that mandate cuts in oil purchase from Iran.”

Previous administrations in the US had made efforts into ensuring that countries cut down on oil imports from Iran.