US Tariffs- Implications to World Economy

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The second term of the Trump administration has created many new concerns about the harmonious functioning of the world economy. Even though the American economy is doing much better than many developed economies, the policies such as tariffs to many of their close counterparts viz. Canada and Mexico would do more harm than good. The tariffs are said to have been retracted due to the threats in terms of counter-tariffs which could implicate inflation surge and the economy to take a drastic turn for the worse. Invariably this is said to have doused the flames of the trade war but the threat to China is still in the works- which could likely impact the global markets in the coming months.

United States Tariffs- Impact and Response from Important Trade Counterparts

China’s Response to the US Tariffs

Currently, the response to the tariff implication is silent from the Chinese counterparts. But the response from China will not be too meek as their measures will likely impact the imports coming from the United States, especially in terms of crude oil, coal, and minerals which are likely to attract tariffs ranging from ten to fifteen percent. This will hurt in terms of imports from the American markets. The ongoing case of Google in China, in terms of the “anti-trust “ decisions, will negatively in the U.S. markets. Backlashes of the market reactions to the countermeasures from China would likely see impact in Trump’s presidency. The impact in terms of manufacturing in the United States will see some negative impact in terms of the dependency on Chinese parts, which were cheaper alternatives for cost-effective production. It will mostly impact U.S. inflation considering the spike in the cost of production and the job market will see a negative impact in terms of “job losses”.  With the impact of restrictive imports from China, the American market is significantly dependent on cheaper textile imports will be affected due to higher costs. This is mostly an impact on the younger population in the United States.

India and U.S. Tariffs

India is said to be in the threat of the U.S. dollar which is a concern. This is said to impact in terms of foreign investment which is likely to impact the growth trajectory of the nation. The rise in cost of imports and depreciating Indian rupee is a call of concern. There is growing uncertainty about a trade war, which could likely impact the global supply market- which is going to be highly inflationary for India. The growing costs will slow down investments in India which could slow down Indian growth which is also driven by low growth in Capex. Though we are not an immediate threat on the radar of tariff barriers- talks between the American and Indian counterparts are said to be an ongoing process. The results of which are likely to show in the coming months. Currently, India is on the thin line of a make-it-or-a-break-it situation to come up with a compromised deal- not affecting the prospects of India’s prospective growth, economically.