Trade war: India extends retaliatory tariff deadline on US products till June 16

India has since been postponing implementation of these duties hoping to resolve trade concerns, including the proposed withdrawal of the Generalised System of Preferences (GSP) by the US. The GSP offered duty-free access to the American market for more than 3,000 items from India.

“The US was supposed to withdraw the GSP in the beginning of May. Since it did not happen, India postponed the retaliatory duty till May 16 hoping that it would be clear by then what was playing on the US’ mind. During US Secretary for Commerce Wilbur Ross’ visit last week, it became clear that Washington did not want to withdraw the GSP scheme till it gave an opportunity to the new government formed after the general elections to sort out its concerns. That is why India is planning to postpone the retaliatory duties till the mid of next month,” the official explained.

While the US seems to be dilly-dallying on GSP withdrawal, it has not given any indication yet on whether it was willing to take back the penal duties imposed on Indian steel and aluminium. The US wants India to address the price cap issue for medical devices, provide greater market access for dairy and agricultural products and also reduce high import tariffs for mobile phones.

In 2018, bilateral trade in goods and services registered a growth of 12.6 per cent to $142 billion, from $126 billion in 2017.

(Source: Business Line)

US-China trade war: India fears flooding of excess Chinese steel

India fears China could soon start flooding excess steel into its market after the US raised tariffs on Chinese products due to the escalating trade war between the world’s two largest economies, according to government sources and industry officials. As a result, the steel industry has asked the Centre to put in safeguard duties of as much as 25 per cent to protect it from growing imports. (Source: Business Line. US-China trade war: India fears flooding of excess Chinese steel )

The Effect of Trade War:

A trade war may improve a nation’s trade deficit in the short run but it could cost warring nations their economic growth in the long term. The United States is currently engaged in a trade war with China, the EU, Mexico, and Canada. Because of this, the affected countries have signed new trade agreements with other countries and have left America out of the loop.

President Trump’s attempts at trade protectionism have already hurt the U.S. economy. They raised the prices of automobiles, computer chips, soda and beer, and heavy equipment. Companies have cut jobs because the cost of production with local materials is prohibitive. U.S. exporters of agricultural products, bourbon, cheese, and auto parts are suffering as foreign markets disappear under retaliatory tariffs. Trump must resolve the trade war soon before it wreaks serious damage on the U.S. economy.

"The Pros and Cons of a Trade War"

The advantages and disadvantages of trade wars in particular, and protectionism in general, are the subjects of fierce debate.

Proponents of protectionism argue that well-crafted policies provide competitive advantages: by blocking or discouraging imports, they throw more business domestic producers' way, which ultimately creates more jobs. They can also serve to overcome a trade deficit. While painful, tariffs and trade wars may also be the only effective way to deal with a nation that behaves unfairly or unethically in its trading policies.

Pros

• Protects domestic companies from unfair competition
• Increases demand for domestic goods
• Promotes local job growth
• Improves trade deficits
• Punishes nation with unethical trade policies

Cons

• Increases costs and induces inflation
• Causes marketplace shortages, reduces choice
• Discourages trade
• Slows economic growth
• Hurts diplomatic relations, cultural exchange

Critics argue that protectionism often hurts the people it is intended to protect long-term by choking off markets, and slowing economic growth and cultural exchange. Consumers have less choice in the marketplace; they may even face shortages if there is no ready domestic substitute for the imported goods that tariffs have impacted or eliminated. Having to pay more for raw materials hurts manufacturers' profit margins. As a result, trade wars can lead to price increases—with manufactured goods in particular becoming more expensive—sparking inflation in the local economy overall.

For a detailed reading on Trade War please click on the following link: Trade Wars and their Effect on the Economy and You - Why Trade Wars Are Bad and Nobody Wins