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China trade war: Will India be caught in crossfire?

March 12, 2018 18:38·
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The best that can be said about the tariffs is that at least Trump getting the U.S in a trade war is better than his getting the U.S.in a nuclear war with North Korea. Even the Indian Steel Association is confident that this move of Trump's will "inevitably encourage steel-surplus nations to divert their exports to vibrant consumption centres like India".

While these threats from the European Union are a drop in the approximate $500 billion bucket the USA exports to the European Union, they have the potential to spiral out of control if Trump retaliates with further protectionist measures. Unrelated but strategically vital United States industries may well be exposed to a retaliatory backlash and China may end up with an advantage in this round.

In 1934, however, FDR introduced a new approach to trade policy: reciprocal agreements with other countries, in which we exchanged reduced tariffs on their exports for reduced tariffs on ours.

His seemingly ridiculous tariffs on steel and aluminium, scheduled to come into effect at the end of next week, runs the risk of wrecking businesses in his own country who rely on the metal for manufacturing all sorts of things, from beer cans to planes, trains and automobiles.

The European Union and Japan, the United States' top economic and military ally in Asia, also reiterated that their exports were not a threat to U.S. national security, rejecting Trump's justification for imposing the tariffs. The term "overcapacity" is code for "China". The AJOT reported last November that steel imports during the first three quarters of 2017 were way up, by close to 20%, over the same period in 2016, in apparent expectation of trade restrictions. And President Trump has undoubtedly been a lighting rod for partisan squabbling.

Although the damage may be limited for India now, considering the low trade volumes in steel and aluminium trade between the two countries, economists point that a full-fledged trade war between the United States and China will have huge repercussions for the domestic business, too.

"There are 77 anti-dumping measures in place, 50 related to steel".

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While it was not entirely clear whether the threat reflected actual USA policy or merely an effort by the president to play to an appreciative crowd, he had used similar language earlier on Twitter.

Trump cited national security as a justification for the tariffs, in large part because of the WTO.

Australian Trade Minister Steven Ciobo insisted on Sunday there was no implicit understanding about a quid pro linking tariffs and future military promises.

"He does not want to understand its architecture, which is based on a rule-based system of open markets". We can not grow on a sustained basis until we export. Most significantly, these factual determinations and legal conclusions are subject to judicial review.

"A strong steel and aluminium industry are vital to our national security, absolutely vital..." It is time to work out more radical measures to defend the interests of domestic industries and workers. And if this escalates into a full-scale trade war, we'll be back to the bad old days. First it offshored production to Ireland, and then to China. In that respect, United States hi-tech companies could be vulnerable to retaliation. I recently read an interview with Elon Musk, the CEO of Tesla, where he complained that Chinese tariffs were making his cars unaffordable in China, while Chinese cars only faced a USA tariff one-tenth as big.

If the Americans persist, we should go further. That's where the USA jugular vein can be found, and that may well be where China strikes. "We want to get as much clarity as possible." and that the European Union is "an ally, not a threat" to the US. China produces enough jeans to take up the slack - even Levis.

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