Comments on Trump's Trade War: An Indian Perspective

Abstract

Noor Aini Khalifah, Universiti Kebangsaan Malaysia: With the backdrop of the decreasing hegemony of the United States and the emerging of two Asian giants, China and India, the article “Trump's Trade War: An Indian Perspective” succinctly captures the current scenario with references to history and the possibilities that the future may hold. From the perspective of leaders and domestic politics, it is always “better” to blame foreigners (“others”) for one's lack of competitiveness.The article highlights Trump's trade war and India's protectionist sentiment via the “Make in India” strategy, which does not bode well for either a liberalized world trading system or a liberalized FDI environment. The asymmetry of capital flows and labor flows between developed and developing countries is another source of contention in Trump's trade war. Both India and China's trade surplus with the United States led Trump to think that there exists “unfair trade practices” in these relationships. The U.S. trade deficit with China is about 20 times that of India in 2018.This article also addresses concern about China's growing geopolitical ambitions whereby both the United States and India aligned their interests in combatting the rise of China. Prior to Trump's tariffs, the strategic partnership between the United States and India was in tandem with Trump's vision of a “Free and Open Indo-Pacific” region. India's prior concern of “cheap” Chinese imports has gained momentum following Trump's trade war against China. India's allegation of “unfair competition” from “cheap” Chinese imports led India to resort to antidumping provisions under the auspices of WTO with the recent imposition of antidumping duties on imports of Chinese steel products. China in turn was the sole or one of the complainants of over two-thirds of the Indian antidumping cases (839 cases) brought to the WTO during 1995–2016, out of a total of 5,286 cases reported to the WTO.The United States is an important export destination for India with about double the amount of exports (US$ 42.2 billion) compared to source of imports (US$ 22.3). On the other hand, India's imports from China were US$ 62.3 billion and exports were US$ 10.2 billion, making India's trading relation with China more significant than that with the United States. It is difficult, however, to estimate the amount of China's trade with India that is conducted by U.S. affiliates domiciled in China.The chronology of events relating to U.S.–India trade by Prema-chandra Athukorala was quoted from many sources including Prime Minister Modi's article in the Wall Street Journal (2017), U.S. Department of State, U.S. Trade Representative (2018; 2019) as well as WTO reports. Data exhibited in the tables were mainly from USITC databases. The commodity composition of U.S. imports from India include semiprecious stones and jewellery (20.5 percent), chemical products (18.28 percent), cut and polished diamonds (16.48 percent), textiles and textile products (15.05 percent), machinery and mechanical appliances (9.31 percent), and mineral products (6.04 percent) amounting to 86 percent of imports in 2018. Overall, U.S. imports from India are based on India's comparative advantage in the production of final goods portraying minimal involvement in production networks. However, Foxconn Technologies’ and Wistron's plans of opening plants in Chennai amid Trump's trade war with China could help India regain missed opportunities from global production sharing. Hence, Trump's trade war with one Asian giant has a spillover effect on another Asian giant.