Trade War Between US and China And Their Effects On India.

What is Trade War?

It is a situation when countries restrict each other's trades by imposing tariff or quota on tariff

When was it start?

Since last eight months trade war is going between the US and China. First time in January 2018, the president of US Donald Trump increased the tariff by 25% on a solar panel which was imported from China

There many several reasons as well as factors behind this trade war.

1. In past, China had done some fraudulent practices which were related to hidden subsidies, manipulation in currencies and technological theft.
2. In past, Beijing had put a restriction on US investment in China.
3. Beijing had also Exploited the WTO global trade framework.

What is happening between the US and China.?

 In the month of July, the trade war was more effective when Trump introduced additional 25% import duties on various products which were coming from different countries. This was actually reprimanded from Trump to China because every year in this period (In July month) China nearly earn US$ 34Billion from the US by trading. However, because of changes in US tariff policy which reduced the earning up to US$ 16 Billion. Hence China has applied the same tariff policy on import of US products. Also in the month of August again Trump reprimanded to China indirectly by imposing 25% tariff on steel and 10% tariff on aluminium which is coming from all countries, except Mexico and Canada.
This is how economic and trade rhetoric Donald Trump has reprimanded China by overturning US trade policy.

The strategy of China against US reprimand.

The strategy is very simple they have liberalized the trading regime with other countries and start taking retaliatory steps against the US by imposing 25% tariff on soybeans, heavy-duty large-size vehicles as well as motorcycle.

Impact on India

1. Demand and Supply of raw materials or furnished material get affected by tariff policies.
2. Value of rupee inflated by a trade war.
3. Export of steel and aluminium to the US is only 1.6% and 2.2% whereas India import 17.1% steel from the US.
4. Indian firms would get a very good opportunity to fill gaps in chinses demand. ex Drug sector
5. India may get another source to get crude oil at a low price because China has another source such as West Africa where they get the same quality of fuel and US would lose its big customer.
6. India has a good opportunity to choose his customer to sell a commodity because of India competitive in textile, garments, and jewellery segment.

Thank you

Nimesh Waghela