Home » Meaningful Minutes » 4 Things To Know About Impact of Trade Wars On India

Meaningful Minutes

It will take you 3 minutes to get a comprehensive perspective on financial topics
 
2 related articles that add to your knowledge
 
One number fact that you should know
 
How it helps?
  • Zero maintenance charges
  • Zero fees for demat account opening
  • Volume based brokerage
Reach Us
Learn the art of Investing

Read More


    Help us improve Meaningful Minutes with 4 simple answers. Take survey

  • 4 things to know about impact of trade wars on India

    Over the past century, the world has become more interconnected and interdependent. No country is wholly sufficient in every aspect. That’s why international trade comes into the picture. (Related: 6 things to know about India’s correlation with global markets)

    However, there has been a growing trade war in the recent times. The US administration has imposed tariffs on products from China and the European Union as a result of the ‘protectionist’ sentiments of the US President.

    Where does India come into this picture? Well, we discuss this problem in this week’s Meaningful Minutes.

  • Historically, India has had high trade with US

    India and the United States of America have enjoyed a good trade relationship for a long time. Indian exports have risen significantly from $21 billion in 2009 to $48 billion in 2018. On a similar vein, the imports have increased from $19 billion to $27 billion during the same period. India’s trade surplus reached a record high of $23 billion by the end of 2017, according to a report by Economic Times. As a result, India became the ninth largest trading partner with the US. (Related: 5 things to know about India’s balance of payments)

  • Recently, they worsened due to trade imbalance

    While trade has been generally good over the long-term, it has worsened recently. The US administration is of the opinion that there have been trade imbalances between the two countries. As a result, the US has imposed tariffs on exports on iron, aluminium and steel. In addition, the US government has made it tougher for Indian employees to get H-1B work visas. This has been a big point of contention between the two countries.

  • Too early to say what happens

    Currently, the US accounts for 10% of India’s exports of aluminium, steel and iron, as per a report by Economic Times. As a result, the impact on India’s trade might be limited. However, there could be greater repercussions if the US imposed wider blanket tariffs in the coming future. In addition, the US has also put India on a watch-list for amassing huge reserves. China and other emerging countries are also included in this list.

  • Indo-China relationship

    In view of the escalating global trade wars, the Chinese President Xi Jinping has come up with a new trade partnership between the two countries. He has suggested to Indian Prime Minister Narendra Modi that India and China should set a new bilateral trade target of $100 billion by 2020, according to a report by Economic Times. And in order to address the current trade deficit, China is looking to import Indian sugar and non-Basmati rice. In addition, China has cut tariffs on soybeans being exported from India.

    • US-India trade tariffs: Which sectors could get affected?   Read more

    • Rise of the Indo-China relationship amidst global trade wars    Read here

  • $48 billion

    This is the value of India’s exports to the US in 2018. This is a record-high over the last nine years. The jewellery and pharmaceutical sectors account for a major portion of this amount. This year, jewellery exports were as high as $10 billion and pharmaceutical exports equalled $5 billion. These numbers could change in case the US increases tariffs in the near future.