Donald Trump Raises Tariffs On China To 104%: What It Means for India

US President Donald Trump has increased tariffs on Chinese goods to a record 104% from today. It is a part of growing US China trade war and a serious escalation in global trade tensions. But the question that spins in everyone’s head now is how will this affect India. Could this situation create problems or open new doors for the Indian economy? However, until recently, the US had taxed Chinese goods at just 10%. Then rising tensions saw President Trump give China 24 hours to pull out its own 34% tariff on US goods. China refused. The US, in response, decided to add an additional 50% to the existing taxes, to make it 104%. China refuses to back down and describes the move as ‘blackmail’.

The real question is how does this affect India

While India is not a part of this trade war, that does not mean it will have not any impact on it. Here's how:

Opportunities for Indian Exporters

As Chinese goods are becoming very expensive in the US because of high tariffs, American companies may start looking for products to other countries, for example, India. Indian manufacturers and exports of sectors like electronics, textiles, machinery and chemicals could get a boost.

India Could Push Make in India

For India it is a good chance to show that it can be a strong manufacturing hub to the world. For long term production, global companies may shift their focus from China to India provided India promotes 'Make in India' smartly and improves ease of doing business.

Short-Term Pressure on Global Markets

The global markets are already nervous about the trade war. Temporary challenges such as stock market fluctuations, rising import costs and a fall in investor confidence may be faced by India. However, these are short term effects that will eventually subside once the situation is stable.

Supply Chain Shifts

China may now disrupt global supply chains that are highly dependent on it. But India has an opportunity to step in and fill those gaps, and that will take quick policy actions, better infrastructure, and attractive offers for investors.

India Must Stay Cautious

However, India should not rush to this move as it also brings opportunities. It could get even more trade war and the global economic growth might take even a hit. India has to remain neutral, not take sides and concentrate on enhancing its own economy. The interest of American companies looking to move away from China.
●    It may lead to potential increase in exports, particularly in sectors in which India competes with China.
●    Better infrastructure and policies to attract investments from the global players is a necessity.
●    Such a global slowdown would have an impact on India’s IT and export sectors.

Will India Benefit From the Raised Tariffs On China?

Of course, but only if India moves quickly. If the Indian government takes steps to improve business conditions, reduce red tape and support industries, India can benefit a lot from this situation. But if global markets do go down or tensions grow further, there could be some short term interjection, economically.
Benefits:
●    Increased export opportunities to the US.
●    Potential growth as an alternative manufacturing hub.
●    Enhanced geopolitical significance in global trade dynamics.
Challenges:
●    Costs rise for industries that import from China.
●    Risk of inflation due to disrupted supply chains.
●    Instability in global markets, where insecurity in the market affects the investor’s confidence.

Conclusion
The US China trade war is on and while there are risks to it, there are massive opportunities for countries like India. As neither US nor China is willing to step back, the US China trade war might become more serious. This is a challenging as well as an opportunity for India. In the short term, Indian exporters may get more orders from the US as Chinese goods will become expensive. Some Indian industries that rely on Chinese parts or material may have to pay more. If India could work harder at improving its manufacturing and creating a vibrant supply chain, it would be a major participant in global trade in the longer term. It could assist India in growing its economy and decreasing its import dependence.

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