Trump’s warning shot: Protectionism can unleash a global trade war

Trump’s warning shot: Protectionism can unleash a global trade war

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US President Donald Trump
 appeared to be at his wits’ end when he made a rash comment after his 
chief economic adviser Gary Cohn put in his papers: “Will be making a 
decision soon on the appointment of new chief economic advisor. Many 
people wanting the job — will choose wisely!” It is both a confession of
 his poor judgment and a desire to have a yes-man. This is an ominous 
sign of rising protectionism that threatens to disrupt global trade. 
Although, China appears to be in the President Trump’s direct firing line, India
 needs to be prepared for collateral damage. The signs are there when 
the US President in an emotional outburst hauled up India for high 
import duties on the iconic Harley-Davidson motorbike despite its 
“insignificant” contribution in the total bilateral trade. Indeed, 
jingoism in any form is irrational.

President Trump’s protectionism may, 
however, hamper the American economy the most. In a last-ditch effort, 
adviser Cohn tried to make Trump understand that undue tariff protection
 to domestic steel and aluminum makers would hurt upstream manufacturers
 like cars and cans. It is unfortunate that the US, which once 
championed free trade ring-fenced by WTO, is resorting to unilateral 
trading barriers instead of sharpening the competitiveness of the 
domestic industry. Apparently under pressure, India has already started 
importing energy all the way from America, which makes little commercial
 sense, especially when such resources are freely available in the 
neighborhood. Indian airlines have placed orders worth several billions 
of dollars to purchase more than 300 American aircraft.


President Trump’s decision to impose steep tariffs on steel and aluminum imports is primarily targeted at Canada
 and China but the impact will be felt by steel and aluminum producers 
across the world. The decision has the seeds to unleash a global trade 
war as the US imports steel from more than 100 countries. China has 
already communicated that it would retaliate if its interests were 
harmed. For Indian manufacturers, it is the time to become more 
competitive. Once the US market gets closed, Chinese exporters would 
turn towards India in a big way.


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