Trade war : An adversity Or opportunity For India

Dr. Rajiv Khosla, Director, Taxila Business School, Jaipur.

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United States Trade Representative (USTR) Robert Lighthizer in a detailed 182 paged document on March 22 accused China of indulging into unfair trade practices which ranged from transfer of technology by entering into forced joint ventures, promoting undue licensing practices, encouraging heavily subsidised industrial policy to remove competition, cyber-related trade violations, etc. This report which is commonly known as Section 301 served as the basis for initiating punitive trade measures against China by President Trump. Since the placing of report by the office of USTR, there has been an accentuation in imposition of tariffs on goods imported from China. Also, there is an equal and swift retaliation from China against US imports. Amid this action-reaction pattern, world markets are suffering from capital outflows and currency weakness which the policymakers associate with hike in interest rate by the US.

Projected end results of the war

Contrary, the advocates believing that the US ‘thriving the trade war suggest that Multinational Companies that have set up production centre in China will find it difficult to source cheap inputs from China owing to the imposition of retaliatory tariffs and reduced exports to US. It will lead to a cutback in production and loss of confidence which may trigger recession subsequently. Whatever be the outcomes of this war, but, it has certainly made international trade more uncertain and turned into a geographical borders a hard nut to crack.

India’s makeshift arrangement