AppArel / COVER STORY
US-China trade war could alter the global business map The ongoing trade war between the US and other countries mainly China is altering business equations amongst nations. Even though it will have less direct impact on Indian exports as apparel and made-up textiles are not included in the currently effective US 301 tariff lists, however, prices of end products are expected to rise
T
he unilateral tariff imposition by the United States on various countries has started a trade war that threatens to adversely affect the world’s major economies. China and the US are currently locked in an on-going trade war as each country has introduced tariffs on goods traded between each other. Although economists feel no country, including the US itself, is likely to benefit from a tariff war, the effects are yet to kick in. During his 2016 election campaign, US president Donald Trump had assured he will fix what he feels is China’s abuse of the broken international system and unfair practices over many years. Along with protecting US jobs for Americans, he also plans to wipe out US trade deficits with countries around the world by renegotiating trade arrangement. With Trump having imposed 10 and 25
per cent duty on aluminium and steel respectively coming from all countries except Canada and Mexico, businesses worth $100 billion out of the total business of $635 billion faced difficulties. Although this was not regarded as a trade war, the big threat came later with the announcement of the $200 billion tariff imposition on China’s export in June 2018. This price escalation makes industry experts feel that that the world is now on the brink of a major trade war, which will affect India too in many ways. The trade war is altering business equations amongst nations. According to the IMF, in 2017, EU exports to Asia were bigger than those to the US. While Asia’s exports to the EU are growing fast, making the Union increasingly more important to Asia. China is now the largest market for an expanding list of countries, including Australia, Brazil, Russia, South Africa, South Korea and Indonesia, among others.
Impact on India yet to show up Most economists had earlier felt that with China being forced to back off, India’s export penetration in the US and elsewhere will increase substantially. However, an analysis of
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