by Elton Gomes
The Trump administration has ordered the imposition of tariffs on $200 billion worth of Chinese imports. These range from burglar alarms to mackerel, in what could be called an escalating trade war between Washington and Beijing. On Tuesday, the Office of the US Trade Representative deliberated imposing 10% tariffs on a list of 6,031 Chinese product lines. The office will accept public comments and will conduct hearings on the plan around August 20 to 23, before coming to a consensus by August 31, as per a Business Standard report.
In June, it was reported that the US imposed 25% tariffs on a total of $50 billion of Chinese products, and Beijing said it would retaliate by introducing measures of the same scale. US President Donald Trump has threatened to tax upto $550 billion of Chinese products. The US is of the opinion that China employs predatory practices in an attempt to challenge the technological dominance of the US.
Robert Lighthizer, US trade representative, said while announcing the proposed tariffs on Tuesday, For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition. Lighthizer added, Rather than address our legitimate concerns, China has begun to retaliate against US products … There is no justification for such action, the Guardian reported.
How has China responded?
Responding to the proposed tariffs, China said that irrational US actions were hurting the world as well as the US. Chinese officials said that the country would seek support from the international community in order to resist trade hegemony. Chinas commerce ministry said in a statement, China is shocked by US behaviour. In order to safeguard the core interests of the country and the people, China will have to fight back as usual, the Guardian reported.
As per the report, Li Chenggang, assistant minister at the commerce ministry, said that the US proposals are interfering with globalization of the world economy, and that Chinas support towards a multilateral trade system will never waiver.
Furthermore, China has accused the US of bullying and warned that the Trump administration will be hit after the proposed tariffs. Chinas commerce ministry said that it will complain to the World Trade Organization, though it did not clearly mention how it would retaliate. Chinas foreign ministry described the Trump administrations threats as typical bullying and said that China will look to counter-attack to safeguard its interests. This is a fight between unilateralism and multilateralism, protectionism and free trade, might and rules, foreign ministry spokesperson Hua Chunying told the press on Wednesday, the Week reported.
How have NATO countries been affected?
Trumps proposed tariffs have caused a flutter among markets around the world. The Bank of Canada raised its interest rates from 1.25 to 1.5 percent, as expected by analysts. Analysts claimed that increasing trade tensions could lead to a bigger impact on investment and exports. The Dow Jones Industrial Average was down 140 points or 0.56%. The S&P 500 opened 0.5% lower, while the Nasdaq Composite fell 0.78%, as reported by the Guardian.
How will India be impacted?
India is one of the top four manufacturers of steel globally, but it exports less than 10 percent of total steel production. As per government data, India managed to export just over Rs 10,600 crore of iron and steel, and related items, to the U.S. in financial year 2016-17. A report by HSBC Global Research states that India accounts for roughly two percent of US steel imports. The report further says that Trumps tariffs will have minimal impact on India, but global prices will likely remain under pressure, as reported by Bloomberg Quint.
In addition, Indian companies are preparing for a potential flood of steel imports amidst the escalating trade war. The US tariffs could lead to trade diversion from other steel makers, who could probably export their products to India, Bhaskar Chatterjee, secretary general at Indian Steel Association, told Bloomberg Quint in an email. Based on data by the World Steel Association, Seshagiri Rao, joint managing director of JSW Steel claims that as much as 80 million tons of steel, or 17 percent of global exports, could be headed to India.
Elton Gomes is a staff writer at Qrius