A radical decision by the US President Donald Trump causes a stir again. India is suddenly at the center of an escalating trade war. What started as a discussion about oil now seems to end in one of the largest trade conflicts between two democracies in years.
Trump rates touch half of Indian exports
With immediate effect, the United States have increased import duties on goods from India to fifty percent. The measure is intended as a punishment for India’s persistent purchases of Russian oil. In addition to the previously imposed 25 percent, there is now an extra rate of 25 percent on top.
For countless Indian sectors, including clothing, jewelry, sporting goods, furniture and chemicals, a loss of competitiveness threatens. It is estimated that more than half of the exports to the US come under pressure. In total it is a trade current of 87 billion dollars.
The Indian rupee has been lost for five days in a row. The stock markets in Mumbai remained closed on Wednesday due to a religious holiday, but on Tuesday they recorded the worst commercial day in months. Since August 18, the Bombay Stock Exchange (BSE) index has been at a loss of almost 14 percent.
Escalation by political ‘missed signals’
According to sources within both governments, writes Reuters news agency, five interview rounds between Washington and New Delhi stranded through “missed signals” and “wrong estimates”. An agreement, similar to that of Japan or the EU, was not forthcoming. India wanted lower levies on American goods, while Washington considers India’s oil deals with Moscow unacceptable.
According to Peter Navarro, Trump trade advisor, there is a quick solution. He stated: “India can lose that extra 25 percent tomorrow if it stops buying Russian oil.”
Severe economic consequences
Thousands of jobs can be lost, especially in Gujarat, the home of Premier Modi. Some experts even speak of two million endangered jobs. At the same time, economists argue that this crisis also offers opportunities: India could use the opportunity to reduce protectionist measures and modernize its economy.
India’s State Secretary for Foreign Affairs, Kirti Vardhan Singh, emphasized that the country will take measures “to mitigate the impact on the economy”. “Our energy security is paramount,” he said. “We buy where it offers us the most.”
An exception of three weeks applies to goods that have been shipped before the start of the new levies. Certain goods, including steel and cars, fall under separate rates and remain out of the shot for the time being.
Europe bends for Trump
Europe came with a trade agreement just before the deadline. In exchange for dropping American import duties up to 250 percent on European medicines and chips, the EU undertakes to serve substantial economic commitments. For example, until 2028, Brussels has to take $ 750 billion in American oil, gas and nuclear energy, plus 40 billion dollars in artificial intelligence (AI) chips. In addition, European companies invest $ 600 billion in strategic sectors in the US, including Defense.
Source: https://newsbit.nl/trump-pakt-india-hard-aan-in-handelsoorlog-helft-van-export-in-gevaar/
