US-China trade war: Impact on chemical exporting firms from India to US

Abstract

With the onset of the US-China trade war in July 2018, the trade patterns between China, the US, and India have undergone a tremendous change. The number of products in which China had a competitive advantage in terms of exports to the US has declined in the last 9 months. A number of developing countries may be benefitted from the ongoing tariff war between the US and China, like Vietnam, Brazil, India, and Korea. In the present study, an attempt has been made to analyse the impact of the US-China trade war on exports of India to the US. The sector which has been selected is the chemical sector comprising of organic and inorganic chemicals as chemicals are one of the top-exported products from India to the US. To analyse the impact, the difference-in-differences technique of regression has been applied. The results indicate that after July 2018, i.e., the commencement of the US-China trade war, the impact on firms exporting chemicals from India to the US has been significant and firms in India may be a potential source for chemicals for the US provided the right policy measures are exercised in India. The results indicate that the trade war between the US and China has had a positive impact on the chemical exports from India to the US. The chemical exports from India to the US have increased post-July 2018, though not at a steep rate. This indicates that India has the potential to export chemicals to the US