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How to Lose Friends and Impoverish People

In his single-minded quest to reduce US bilateral deficits with key trading partners, President Donald Trump has adopted a strategy that promises to make America's economic "adversaries" even more competitive in the future. Worse, he is alienating America's friends just when it needs them most.

WASHINGTON, DC – US President Donald Trump’s “trade war” with China has been slogging along for more than a year now, and could escalate further if current talks do not lead to a deal. But in the meantime, the Trump administration has also accused two longstanding US partners, Turkey and India, of benefiting unfairly from the US Generalized System of Preferences (GSP) for developing countries. Having already erected trade barriers against Turkey last year, the US will now revoke the preferential treatment afforded to certain Turkish and Indian imports under the program.

According to the US Trade Representative, “India has implemented a wide array of trade barriers that create serious negative effects on United States commerce.” In fact, it is an insult to suggest that US industry cannot compete with lower-productivity firms in a lower-income country.

India’s per capita GDP, at around $1,900 (in 2010 dollars), is one-quarter that of China and less than one-twentieth that of the US. And that is a vast improvement on previous decades, when India, like most developing countries, was abjectly poor, with an extremely low literacy rate, abysmal infrastructure, and a weak health system. In 1960, the country’s per capita GDP was a mere $304.

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