US President Donald Trump signed a memorandum that could impose tariffs on up to $60 billion of imports from China, while in retaliation China planned to levy $3 billion worth of duties on American imports. These decisions started a trade war between the two giants while creating a panic among the markets and softening many currencies.
Many people in India were also concerned about the impacts of this war on Indian markets. The markets did respond to this by falling up to 1%. Although negative news, this could turn out to be a blessing in disguise for India. Unlike the US which has a trade deficit of $175 billion towards China, India’s trade surplus with the US at $22.9 billion is not significant. US’s heavy duty on Chinese goods can help in increasing India’s export to the US. The Indian companies must use this opportunity to the fullest.
According to Ajay Shrivastava, CEO, Dimensions Consulting, India cannot get harmed by the trade war as it is a very small contributor to the world trade and more than the trade war it is the liquidity of the market that would affect the Indian markets. Sandeep Tandon, MD & CEO at Quant Broking said that the markets would have lag due to the war but it won’t be a permanent one and the Asian markets of China, India, Taiwan or Thailand would still have an influx of money.
Although the move taken by Trump was to reduce the trade deficit of US but to eliminate the Chinese goods totally from their markets is very difficult especially when they constitute more than 30% of the US market. With Trump’s process being a long one, the Indian market needs to be alert for any change occurring in the policies of the whimsical US president.