U.S.-China Lock Horns: Should India Be Worried?

Trade wars unlikely to have an impact on India, experts say.

Containers sit stacked at a shipping terminal in Japan. (Photographer: Akio Kon/Bloomberg)
Containers sit stacked at a shipping terminal in Japan. (Photographer: Akio Kon/Bloomberg)

India is likely to remain insulated from the ensuing trade war between the U.S. and China for now but will have to keep a close watch on the global developments, according to experts.

There are two parts of the trade war: tariff and non-tariff, and at this point of time, India may see some spillover effect due to the tariffs imposed on steel and aluminium, said Jahangir Aziz, senior Asia economist at JPMorgan, told BloombergQuint. “But [it’s] nothing too damaging.”

The more concerning aspect would be the non-tariff side, where the U.S. has accused China of intellectual property theft and forced technology transfers, he said.

If India becomes part of cases with regards to intellectual property policies, it could get hurt... as the impact of this would be more long term.
Jahangir Aziz, Senior Asia Economist, JPMorgan

Aziz didn’t elaborate on the quantum of the damage from the tariff and non-tariff war as there’s still no clarity on the number of items on the list.

President Donald Trump yesterday announced tariffs of at least $50 billion on imports from China, its largest trading partner. In a retaliatory move, China has said that it plans reciprocal tariffs on import of select goods worth $3 billion. Earlier this month, he imposed tariffs of 25 percent and 10 percent, respectively, on steel and aluminum imports.

Shaktikanta Das, India's Sherpa at the G-20 and former economic affairs secretary, said only a small part of India’s total exports of aluminium and steel is to the U.S., and so it’s insulated compared to many other countries.

He remained optimistic about the U.S. and China finding a resolution to the trade war soon by engaging in bilateral talks, as failing to do so may lead to affect the downstream industries in both the countries, which are heavily dependent on imports of raw material from other countries.

Das also allayed fears of future action by the U.S. against India with regards to trade incentives.

India has always worked within the WTO (World Trade Organisation) parameters... so there is no possibility of a knee-jerk reaction (by the U.S.).
Shaktikanta Das, India Sherpa, G-20