Recent trade tensions have raised alarm in India concerning a potential surge in Chinese imports, with officials assessing the situation following China’s 34% tariff on US goods. The Indian government is exploring measures to protect domestic industries, and negotiations with the US are underway. Trade experts highlight risks related to oversupply from China disrupting various sectors in India.

In response to escalating trade tensions, particularly with China implementing a 34 percent tariff on all US imports, senior officials from India’s Ministry of Commerce and Industry convened to evaluate a probable surge in imports. This meeting took place against the backdrop of reciprocal tariffs set to commence on April 9, which has raised concerns over an influx of Chinese goods into the Indian market due to China’s production overcapacity and ongoing trade disputes.

The 34 percent tariff complicates the entry of US agricultural products into China and potentially benefits other countries such as Australia and Brazil, allowing them to expand their market share in China. Indian steel manufacturers have expressed worries regarding the 25 percent tariffs imposed on steel and aluminum by the US, leading the Commerce and Industry Ministry to recommend a 12 percent safeguard duty on steel to address these concerns.

While an official from the Commerce and Industry Ministry stated a clearer picture of the situation should emerge in 10 to 15 days, India has chosen to pursue negotiations with the US rather than retaliatory measures, contrasting its approach during the previous Trump administration. Economists and trade experts have voiced alarm about the surge of Chinese exports following the US tariffs, with HDFC Bank emphasizing the risk of oversupply affecting domestic manufacturing.

According to Crisil Ratings, the risk of indirect impacts from US tariffs on sectors such as electronics, machinery, and textiles remains high, as Chinese exporters may redirect their goods to India. This diversion poses a threat to Indian industries, though the government may consider imposing anti-dumping duties to protect local exporters.

In a recent analysis, the Lowy Institute reported that 80 percent of countries engaged in more trade with China than with the US. Despite this, the US continues to play a significant role in global demand by increasing imports from nations like Vietnam and Mexico. The report indicates a risk that US tariffs on Chinese goods may compel China to augment exports to third markets, disrupting traditional supply chains.

Ajay Srivastava, a former trade officer, emphasized the need for India to navigate carefully within the escalating US-China trade war. He warned that the recent tariffs could lead to an excess of US agricultural products, such as soybeans and corn. Additionally, the National Trade Estimates Report from the USTR highlighted India’s stringent regulations on ethanol imports, suggesting that any concessions could be viewed as favoring the US and risk retaliation from China.

The escalating trade tensions between the US and China have raised concerns in India regarding a potential influx of Chinese imports, as reciprocal tariffs take effect. The Indian government is preparing for possible challenges by evaluating current trade policies and considering protective measures. As the situation develops, it remains crucial for India to balance its trade relations with both powers to safeguard domestic industries while minimizing adverse economic impacts.

Original Source: indianexpress.com

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