US-China Trade War: Good or Bad for India?

by August 7, 2019 0 comments

The trade war between China and the US, where the gloves are now off, will impact India for better or for worse

For years before he became the 45th President of the US, Donald Trump used the media platforms to complain about how other nations have abused America’s trust by skewing the trade system and how “unfair” trade deals were taking away jobs from home. His rant against the global trade system, ironically anchored to the US economy, was popular, particularly among the working class Whites in the American Midwest. As a result, in 2016, he won a surprising number of States where Hillary Clinton was supposed to win in a canter. And as promised, he unleashed hell on global trade, renegotiated deals with his two neighbours, threatened European car imports and even wine and, of course, trained his sights on China. But the Asian giant was primed for a fight. With tariffs and counter-tariffs by each side, now China is playing around with its currency and the US has formally declared it to be a currency manipulator. This renewed tension has sent shockwaves through global markets. The Indian rupee and  bourses are also getting spooked. Particularly with Trump making it clear that India has “unfair” trade terms with the US, investors are understandably worried. Trump’s style of open, public negotiating tactics using Twitter means that his tweet is a genuine market-moving tool.

India, therefore, finds itself in a particularly strange pickle. It might be targetted by Trump but if it plays its cards right on the trade front, it could, in return for greater market access for some American products like dairy, poultry and motorcycles, gain greater access for Indian manufactured goods. US firms and their suppliers are looking to start new manufacturing bases outside China. Our eastern neighbour could also become a customer of our agricultural produce. This could give a dramatic surge to the “Make In india” programme and potentially create millions of jobs that could boost the economy. This is why India should take up trade talks with the US very carefully and with attention from the very top because dealing with Trump is not easy. Even his much-ballyhooed friendship with North Korea’s Kim Jong-Un is strange, with the North Koreans firing missiles over the past few days. Narendra Modi is no ordinary politician and he will need the skills he has developed over four decades to come to the fore when dealing with the US President on trade. 

Writer & Courtesy: The Pioneer

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