NewsPatrolling.com : “The trade war between the US and China threatened to precipitate after Donald Trump announced a series of trade tariffs on Chinese imports. Total Chinese imports to the tune of $50 billion will get impacted by this announcement. The entire trade war package will be much larger. Apart from the tariffs on Chinese imports, Trump also intends to penalize China for alleged theft of intellectual property from the US. Additionally, Trump has also asked the US Treasury Department to restrict Chinese investments into the US, especially in buying up American companies.
The big question is what will be the retaliation from China? Firstly, China could put retaliatory tariffs on pork and other imports from the US. But the US runs a huge $375 billion trade deficit with China and in any trade war; China is likely to get hit the most. But China holds nearly $1.4 trillion of US treasuries and that can used as a bargaining chip as any sudden sale could literally roil global bond markets. It is now clear that while Trump had declared trade war against all the trade surplus nations, the real target was always China.
What are the concerns from the US trade war to the world in general and the Indian economy in particular? Firstly, any trade war tends to be internecine meaning that all the participants tend to lose out in the end. A trade war may actually end up making the WTO redundant. Secondly, trade wars have the tendency to culminate in currency wars and if China triggers a currency war then it could have larger repercussions for global commodity markets. Lastly, the biggest worry is evident in the price of commodity stocks which have crashed. This trade war is expected to trigger a slowdown in industrial investments and also in output. That is what is putting pressure on world markets. If the Nifty cracking below the 10,000 mark is any indication, then the Indian markets are surely sufficiently worried.”
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