It appeared that US President Donald Trump had abandoned the idea of starting a trade war with China. But as is his wont, he has finally kicked it off with China retaliating forthwith. The two countries have slapped tit-for-tat duties on $34 billion worth of the other’s imports on Friday. Beijing has accused Washington of triggering the largest-scale trade war. The US President has threatened that the US may ultimately target $500 worth of Chinese goods. So it may be only the tip of the iceberg. China has targeted US goods including cars, soya beans and lobsters with 25% tariffs. The tariff war has fuelled the fear that a prolonged and escalating battle will hit global trade, investment and growth. US farmers will suffer badly. Food prices in China will shoot up. Some Chinese ports had delayed clearing goods from the US. Chinese state media have slammed Trump’s trade policies calling his administration a setup run by a gang of hoodlums. The Chinese Commerce Ministry considers US tariffs a violation of world trade rules. It is said to have initiated the largest trade war in economic history. Trump has been severely critical of China’s intellectual property theft. China has also been accused of barring the entry of US business. What effect the conflict will have on the North Korean scenario remains to be seen.
At the same time, Russia has imposed extra duties of 25-40% on some imports from the US. The EU will soon take action to prevent steel produced for the US from flooding into Europe due to tariffs imposed by Trump who seems to be besieged. At this rate India will also have to take a stand that is in its economic interests. But how this trade war will play out in the long run is impossible to predict. What is sure is that the trade wars will affect the global economy of which India is a critical part.