Diplomatist Magazine Diplomatist July 2018 | Page 29

COVER STORY
President Donald Trump and China’s President Xi Jinping
took offi ce. Although a high level meeting between President
Trump and Chinese President Xi in May 2017 resulted in
concessions made by China to increase the market access
for a variety of U.S. products and services like beef,
biotechnology products, credit rating services and electronic
payment services, bilateral tensions increased with President
Trump’s announcement of steel and aluminium import tariffs.
Regardless of the fact that, already, more than 94 percent
of U.S. steel imports from China are subject to U.S. trade
restrictions, the new tariffs constitute a provocation for China,
which is the world’s largest producer of steel and aluminium.
China followed other countries that introduced retaliation
measures against the U.S. and raised import tariffs up to 25
percent on a variety of U.S. products worth $3 billion.
Another dispute between the U.S. and China has evolved
over the protection of intellectual property rights. In March
this year, President Trump announced that he will take action
against China concerning the alleged theft of intellectual
property. Following this announcement, in April 2018, the
U.S. Trade Representative Robert Lighthizer presented a list
of Chinese products worth $50 billion which are now subject
to a 25 percent tariff. China reacted by announcing a similar
list of products from the U.S. which will face tariffs. President
Trump again responded immediately and ordered the Offi ce
of the U.S. Trade Representative to prepare an additional list
of products with tariffs on trade worth $200 billion.
Trump’s trade policy and India
President Trump has so far not targeted India directly with
his protectionist policies. This is not a surprise, because India
does not belong to the top-5 countries with which the U.S. has
a trade defi cit. In fact, its defi cit with India is less than half
the size of the one against Mexico. Nevertheless, the tariffs
on steel and aluminium will also be levied on imports from
India and will affect an estimated $241 million of trade fl ows
from India. Moreover, there are likely to be indirect effects
that India will suffer from in case of a trade war between the
United States and China.
Regarding the tariffs on steel and aluminium that the
Trump administration has introduced, India decided to
respond by increasing import tariffs on products coming from
the U.S. with the intention to exert a corresponding effect
on the latter. Therefore, India submitted a list of 30 items to
the WTO on which it intends to increase tariffs by up to 50
percent on imports from the United States. They include, for
example, motor cycles and specifi c iron and steel products.
The tariff hike complements the retaliation of other countries
hit signifi cantly by President Trump’s decision. It is also in
line with the extent to which the other countries responded
and is at a level that intends to create an equal implication
on the United States.
A potentially larger effect on India could result from the
indirect effects of a trade war between the U.S. and China.
Extraordinary and Plenipotentia ry Diplomatist • Vol 6 • Issue 7 • July 2018, Noida • 29