After angry US President threatened China with a new raft of tariffs, Rahul Khullar, former commerce secretary, said Donald Trump is pandering to his supporters and he is still optimistic that both the countries will try to work out something on that front.
The latest standoff between the two countries was triggered by Trump’s decision last week to impose 25% tariff on Chinese goods worth $50 billion. Beijing retaliated to that move by imposing 25% tariff on US goods worth $34 billion.
Now, an angry Trump has threatened China with a new raft of tariffs. He has asked his team to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10%.
“If India is not targeted, the prospect of a trade war does imply that India is under threat, even if it’s not done politically or through language, the effect of the tariffs will mean we will have economic consequences,” he said to CNBC-TV18.
Rajiv Kher, former commerce secretary, said Beijing is exposed more to the vagaries of Washington policy establishment, because Beijing is exporting more to the America and elsewhere. Therefore, Beijing is bound to be a bigger loser in a purely trade related scenario.
“This is a lose all kind of a situation, because if you escalate this trade war, it’s only going to be at the detriment of everyone who is involved,” Kher said to CNBC-TV18.
He said there is need to recognise that this appears not just a trade war, but we are getting into is a much broader shakeup and clearly the repercussions in China will be shown in many other non-trade areas.
Kher further added, “This is to be seen in the context that India and US have been allies as far as economic cooperation is concerned and therefore we believe that US will not take a measure which brackets India with let us say the likes of China as far as US bilateral trade is concerned.”
Kher said we need to recognise that there are two aspects to this whole issue, one is, trade war and the other is the bilateral issues between the US and India.
Speaking to CNBC-TV18, Shailesh Kumar, Director for Asia at Eurasia Group, said he doesn’t think trade war is going to go beyond the economic lens.
Kumar said main focus for Trump is the domestic audience at the core and his agenda is to appease those of his voters, who believe that they have been affected by what they coin to be unfair trade practices.
“For example, the initial push was against China and it then expanded out to Canada and Mexico and some of the US allies in Europe,” he added.
He said steel has been somewhat sensitive in past US administrations too but Trump retaliating against Canada, which isn’t even really threat on the trade front to be honest.
According to Kumar, Trump is trying to send a signal to his voting base in parts of America in the manufacturing and commodities sector, like the steel, coal industry and elsewhere, to show to them that he is standing up for their rights.
Kumar further added, “Trump is actually not wrong in saying Indian tariffs in some sectors are high, I don’t think anyone will dispute that point. But as I mentioned, they are not aimed against US.”
“Compare the US-India trade deficit against the US-China one and there is a huge difference. Simply on a numerical basis, going after India doesn’t really do much. Second, we have seen this happen since his presidency, he doesn’t view India, the way he views the rest of the world. He almost has a bit of a soft spot for India. He sees what India maybe going through in terms of where it is in this part of the world,” Kumar said.
He said, “Ultimately, Trump doesn’t gain anything really politically by going after India and nor does the country gain economically by going after India. So, what you are seeing on the retaliation in the last week on the Indian side about going and hitting US, for example some tariffs, even that is not really getting much mention in the US side because it doesn’t amount to a whole lot in terms of dollars.”