Dinesh Kamath's Editorial 'India, US and China and Trade War' that was published in Newsband

India, US and China and Trade War

The U.S.-China trade war has flared up again. President Donald Trump tweeted that he would raise the 10% tariff imposed on $200-billion worth of Chinese goods to 25%. China promptly promised retaliatory action, but was yet to spell out the measures. This elevates the risk of a global trade war to its highest level. The world economy is poised at “a delicate moment”.

The world economy faces the very real risk of an escalation in this trade war where other countries, including India, can largely only wait and watch as the U.S. and China raise the pitch. While the U.S. may have genuine concerns about Chinese protectionism, the overall economic logic behind Mr. Trump’s trade policy still remains weak.

Indian policymakers would do well to closely monitor how the latest escalation in trade tensions pans out for global demand and international energy prices. The RBI has flagged oil price volatility as a factor that would have a bearing on India’s inflation outlook

It’s a challenging task to maintain a steady and peaceful trade relations. Several types of changes have been taking place due to improvements in several fields. The tensions related to trade must be avoided by finding better and new solutions by utilising the services of experts, scientists, professionals in the field. Along with other develoments there is a huge developments in the human knowledge levels too. Hence let’s solve the issues professionally.

The prices of the things the US Consumers buy, from floor lamps to canoes and bicycles, are slated to go up, literally overnight, as the Trump administration makes good on a promise to raise tariffs. With trade talks between the U.S. and China yielding no deal, consumers and the businesses that serve them say they're bracing for bigger ripple effects. Retailers, manufacturers, small farmers and multinational conglomerates in the US are united in their concern about the potentially damaging impacts of additional tariffs to their businesses and their consumers.

U.S. Commerce Secretary Wilbur Ross, while in New Delhi, lashed out at what he called India’s unfair trade practices and “overly restrictive market access barriers”. His comments followed a series of measures by the U.S. that have affected India. Ross repeated President Donald Trump’s accusation that India is a “tariff king”, and threatened India with “consequences” if it responded to U.S. tariffs with counter-tariffs.

In the face of growing U.S. aggression on the issue, the government that takes office after the election will have to urgently consider its options ahead. New Delhi and Washington need to make a more determined attempt to sort out issues, starting from scratch if required, with tariffs. New Delhi will have to work closely with other countries to build alternative financial structures to avoid U.S. sanctions. Where a compromise is not possible, the government should be ready to push back on unreasonable demands.