Choosing the Right Allies

In the midst of a global trade war where India's imports from China vastly exceed its exports, careful partner selection rooted in historical ties—rather than reactive diplomacy—is essential to avoid strategic missteps akin to the Ottoman Empire's ill-fated choices in 1914

- DIPANKAR DEY

The trade war that US President Donald Trump has started is getting more extreme every day. The World Trade Organisation on Wednesday estimated the US-China trade tensions could cut the trade of goods between two economies by as much as 80 percent. "This tit-for-tat approach between the world's two largest economies carries wider implications that could severely damage the global economic outlook," it said. Indian exporters fear that the reciprocal tariff which the USA threatened to impose on Indian export would not only reduce demand of Indian goods in the short run but it also intensifies fear of dumping from China as a much steeper US tariff on Chinese exports will compel the Chinese companies to look for alternative markets.

An analysis by South China Morning Post reveals that in addition to China, Japan, South Korea, Vietnam, Thailand and Malaysia appear as primary targets in US President Donald Trump's tariff war.

Nonetheless, a group of policymakers in India argues to take advantage of the US tariffs imposed on China by attracting foreign investors to relocate their supply chains to India. This strategy is part of India's broader objective of 'Make in India/Atma Nirbhar Bharat' to reduce its dependence on imports, foster its domestic manufacturing sector and establish itself as a key player in the global supply chain, euphemistically termed as 'China plus one' policy. Analysts are of the opinion that while such policies look logical, their executions have been problematic. According to The New York Times, the US imposing tariffs on many Asian countries has made China a more "appealing option" as companies are scared to make a hasty decision amid upheaval in global trade.