Last Friday marked the beginning of the US-China trade war, which had already been on in war of words, for a few months. China termed the US decision to slap additional tariffs on 25 % of Chinese products imported worth USD 34 billion, as the biggest trade war in financial history. As expected, the first repercussion of the US decision happened with a crash of major stock markets with their closing in loss. The value of Chinese currency, the yuan also collapsed.
China retaliated with additional taxes on 545 US products worth 34 billion. The White House reaction to this was the threat that in the next fortnight Chinese products worth USD 16 billion more will be brought under the additional tax net. Most financial experts are of the opinion that this trade war between the world's two biggest economic powers will only worsen the financial insecurity already prevailing in the world. They are giving the warning that this will make big socio-economic repercussions including huge job losses in the US and other countries too. The World Bank and IMF have taken the position that the economic confrontation America has triggered will serve no country's economic progress and that their action is patently wrong. More than that, they also share the concern that the international trading network will be jolted by the US decision. The loss in trade as a result of this wrong decision is estimated to be about 400 billion US dollars in the current year.
The tariffs on China is only a continuation of its economic confrontation with European Union, Mexico and Canada through additional taxes. Financial analyst institutions within US itself point out that, the Trump doctrine that the decision is to save the markets for America and Americans' jobs has proved to be wrong. Brookings Institution observes that 82 % of the tariff increases imposed by China on items like soy bean and automobile will hit the states where Trump had won most votes and the corporates who had extended liberal funds for his win. 38% of the items on which China introduced tariffs are agricultural and food products, and 24 % are on fully automobile items including vehicles. But 95% of the products the US imports from China are capital equipment for domestic products or components for machinery produced in America. For that very reason, it is also estimated that not only China and other countries, but even America itself will stand to suffer huge losses in this war. They also point out as evidence the fact that right when the US-China war of words began, major US automobile companies had slashed jobs. If the EU, which had suffered a humiliating experience with Trump at the G7 summit in Quebec, decides to make a revenge on him by attending the Sino-European summit on July 16-17 at Beijing, the trade war will be a heavy blow to Trump not only economically, but politically as well.
It will be the entire world that will be forced to pay the price for the senseless policies of the President of America, which has a pivotal role in the world's economic and political spheres. But, the major country who will be tested most politically and economically in this financial tussle, will be India. If America wins in the financial war with China, the next is sure to be against India. Our country, now suffering from the worst currency depreciation in history, does not have the resilience to survive such a financial war. In areas such as enforcement of intellectual property right, amendments required in Indian Patent Law, entry into the banking sector, and cancellation of trade with Iran, the fate of India will be to easily succumb to US pressure. And on the other hand, there are moves behind the scene to make up for US's loss from trade war with China, through additional trade with India. In short, amidst the US-China trade war, the position India will adopt will be crucial for the future of the country.