Trade Wars Current Affairs
Union Finance Ministry has further extended deadline on imposing import duty hike on 29 products, imported from United States (US) by 45 days till September 18, 2018 from earlier August 4, 2018. This decision for extension of retaliatory measures for another 45 days was taken based on suggestion of Union Commerce Ministry. It also comes after some positive expectations from ongoing talks between two countries as they are wrapping up negotiations on mutually-acceptable trade package for boosting India-US trade through greater market access.
The duty hike move 29 products announced by India in June 2018 was tit for tat retaliatory measure to March 2018 decision of US President Donald Trump to impose heavy tariffs on imported steel and aluminium items. The additional duties imposed by India were aimed at helping government earn additional $241 million, equivalent to amount of iron and steel trade affected by US measures. The 29 products included agricultural products such as almonds, apples, chickpeas, lentils, and walnuts, and industrial inputs such as boric acid, phosphoric acid, diagnostic reagent, flat rolled products of iron, certain flat rolled products of stainless steel. Prior to issuing duty hike notification, India has also had dragged US to World Trade Organization’s (WTO) dispute settlement mechanism over imposition of import duties on steel and aluminium.
United States has slapped stiff 25% tariff on US $50 billion worth of Chinese goods. It has accused China of intellectual property (IP) theft and unfair trade practices. This decision has triggered full-fledged trade war between world’s two largest economies.
The tariffs will be applied in two waves. The first will apply to 818 Chinese goods worth $34 billion and in second wave it will apply to 284 goods worth another $16 billion. The focus of the tariffs is on industrial goods, particularly in areas identified under China’s Made in China 2025 plan designed to encourage growth in particular industries. It generally focuses on products from industrial sectors that contribute to or benefit from “Made in China 2025” industrial policy. It includes industries such as information and communications technology (ICT), aerospace, robotics, industrial machinery, new materials, and automobiles.
US’s decision to impose fresh tariffs on China follows his recent imposition of steep tariffs on steel and aluminium imports from Canada, European Union and Mexico on national security grounds. The EU and Canada are planning to enact retaliatory tariffs starting in July 2018. Mexico has already retaliated with its own tariffs on US goods.