The punitive tariffs imposed on India and China among others by the United States (US) have severely affected global trade balance which may create an unprecedented world-wide crisis.
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The punitive tariffs imposed on India and China among others by the United States (US) have severely affected global trade balance which may create an unprecedented world-wide crisis. Beyond a doubt, this is not good news for a world which is already facing several challenges ranging from security to health and education. So, it will be better if the US President Donald Trump adopts some sensible methods to further consolidate the country’s economic hegemony without indulging in such unreasonable steps potentially dangerous to world peace and stability. It is time for Mr. Trump to realize that not only the countries that have refused to toe the US line, but also the countries supporting the US are suffering equally. For instance, several European nations have already started voicing against trade imbalances caused due to the ongoing tariff war. In such a situation, all the nations have started looking for new trade partners with the twin aim of keeping the export scenario stable and at the same time preventing any fall of their respective currencies as lesser exports are likely to weaken currency value.
It may be mentioned here that India prominently figures among the countries that are looking for new trade partners to minimize the US tariff impact as much as possible. Several new trade treaties that New Delhi has signed with other nations, will help the country immensely in future. For example, India and Oman have recently signed the Comprehensive Economic Partnership Agreement (CEPA) in which the gulf nation has agreed to provide duty-free access to 98.08 per cent tariff lines to India, which covers almost the entire export from India to that country. Earlier, India has also signed a similar free trade agreement with England. Talks are also on with a couple of other nations for similar agreements which will be beneficial for both the countries. At the same time, India has also initiated some steps meant for far-reaching policy reforms. Among which two most important reforms are allowing 100 per cent FDI in the insurance sector and the passage of the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Bill. While the first one will attract big insurance players to tap the lucrative Indian market, the second will encourage various private nuclear suppliers to India as the new law has eased the liability clause considerably.
But till the time these thoughtful steps bear fruits, India has to cope with the unilateral decision taken by the US. The downward journey of the rupee against the US dollar stands as a testimony to this fact. In recent times, the rupee has touched record low against dollar which has provoked massive withdrawal of FDIs from the Indian market. Such a move was expected as investors always look for lucrative returns, which has faded away as the rupee continues its downward journey. However, a section of the international observers is hopeful that the present phase will be over soon as the US will be interested in reaping benefits from insurance and nuclear bills which may compel the country to withdraw tariffs imposed on India.