President Donald Trump has imposed tariffs worth up to 60 billion dollars on China especially on steel and aluminum products. China has retaliated by imposing tariffs on US imports worth $3 billion. A trade war is imminent, adversely affecting stock markets. China’s tariff barrier can even hit US agriculture, particularly its soya bean farms. Trump has accused China of violating intellectual property regulations but China insists on its right to intellectual property. The US has a $375 billion trade deficit with China at the World Trade Organisation (WTO). Countries other than China have also hit back against US tariffs. Regrettably, Trump’s action comes at a time when the global economy is showing an uptick. It may also cast a shadow over the historic talks expected to be held between the US President, Donald Trump and the North Korean President, Kim Jong-Un over North Korea’s de-nuclearization.
India must steer clear of the US unilateral action. India’s exports have risen to $25 billion. The trade war between the US and China may undermine the global economy. Director General of the WTO, Roberto Azevedo who was in Delhi made that gloomy prediction. He has asked for urgent talks between the US and China to resolve the crisis. So has Indian Prime Minister Narendra Modi. FICCI proposes to effect a breakthrough in the impending trade war. The US is still India’s biggest export market. China is a major source of imports for its industry. India has a trade surplus of over $20 billion with the US. That can provoke Trump to come down on India as well. India’s economy is sustained by exports and collaboration with both the US and China. It has to act cautiously.