Trade War, Rupee Depreciation, And The India Economy

The trade war, rising rupee exchange rate, rising current account deficit, and the like have been major topics of concern for Indian economy watchers.

- Kishore Kumar Biswas

They have sparked contentious political debates. While these are important issues, the larger focus on employment generation should not get diluted.

The present international trade order is highly influenced by the U.S. economy under the Donald Trump administration. Before becoming president, Trump promised to increase employment opportunity of the Americans in their own country and lower their dependence on imports. In the first year of Trump administration, the trade deficit reached the highest level to $ 800 billion. As a result, the Trump administration imposed tariff imports in early March 2018 on steel and aluminium. It was mainly seen to be directed at Chinese imports. This is because Trump claimed that China had been involved in “unfair practices” in foreign trade. Within a short span of time, China adopted retaliatory imposition of tariff on American imports and that was the beginning of the trade war.

Is there economic logic behind U.S.' imposition of tariff?