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  • 5 indicators to gauge the intensity of current trade war

    Publish date: 29th June, 2018

    We are in the grips of a trade war -- and it is expected to get shriller in the coming months.

    The US president Donald Trump’s seemingly protectionist policies have stoked economic tensions globally. India isn’t immune either as Trump has stridently chastised its high import tariff policies.

    Set against this backdrop, here are five indicators that can help you gauge the impact of the ongoing trade war:

    5 indicators

    • PMI index: Trade was one of the major planks on which Donald Trump built his electoral win in the US presidential election. And with the US mid-term polls fast approaching this November, a trade war has been flared up due to the US’ seemingly protectionist policies.. Trump is determined to win the elections for Republicans and retain majority in Senate & House. He believes that spending, tax cuts, trade and emigration are issues which can get his party the winning votes.
    • Related: How to read PMI data

    • Electronics: Electronic exports are a key component in global trade. By 2020, the Indian electronic market is expected to reach $220 billion, as per a report by the Economic Times. But with the US aiming to increase tariffs on China’s electronic items, economists consider this to be an important indicator to watch out.
    • Related: US-China trade face off: Why should India be concerned?

    • Trade volumes:Global trade volumes is another key indicator. Cargo traffic between countries, for example, is an important way to identify changes in trade volumes. As of now, the status quo has not been disturbed greatly.
    • South Korea: Being one of the world’s leading manufacturers, exports from South Korea are a key indicator for analysts to identify where global economic growth is headed. As of the first 20 days in June, exports have reduced by 4.8% on a YoY basis, according to a report by Bloomberg.
    • China: It is the second biggest economy in the world. Its major exports include clothing, footwear, electronic and plastic products. As a result, it is a key measure in gauging the health of the global economy. And while trade seems to be holding up, there are signs of slowing down in the near future.

    The bottom line

    To sum up, the sharpening of global trade policies can make a significant dent on India’s economy. Therefore, keep an eye out for these factors in order to avoid any fiscal headwinds.

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