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Trade war: The US scores own goal

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The year 2018 will be remembered for having witnessed the ‘trade war’. What begun on March 9, 2018, through the US announcement to increase tariffs on its steel and aluminium imports has now acquired a global character. With the US refusing to withdraw the tariff hikes, countries across the world, including America’s largest trade partners like the European Union and Canada, have reacted through retaliatory tariffs on US exports. The global trade war is likely to escalate with the US threatening to impose tariffs on automobiles and auto parts and components as well. Such tariffs, needless to say, would invite further retaliation.

The global shades of the trade war fail to mask a prominent bilateral strand within it. A major part of the tariffs being slapped back and forth involve the world’s two largest economies—the US and China. US trade actions have combined two aspects: global tariffs and China-specific actions. The latter include imposition of 25% tariffs targeted across more than 800 categories of goods ‘made in China’. The first part of these tariffs have become operational since June 6, 2018.

A Presidential statement issued on June 15, 2018, mentions such tariffs would eventually cover $50 billion of Chinese imports, suggesting tariffs on more imports are to follow. China has immediately reacted by increasing tariffs on an equivalent........

© The Financial Express