US trade curbs on China may lead to dumping of Chinese goods in India

The fresh trade war between the United States and China is raising global concerns as experts warn that US policies could lead to dumping of Chinese goods in other markets, including India.

The US administration on Tuesday announced a series of proposed tariff increases on imports from China including on electric vehicles (EVs), medical products, lithium ion batteries, semiconductors, solar cells, aluminum, and steel.

“I just imposed a series of tariffs on goods made in China: 25% on steel and aluminum, 50% on semiconductors, 100% on EVs, And 50% on solar panels,” US President Joe Biden said.

“China is determined to dominate these industries. I’m determined to ensure America leads the world in them,” Biden further said. 

Deciphering the repercussion of the US move, India-based think tank Global Trade Research Initiative (GTRI) said that India may become a dumping ground for Chinese products and warned New Delhi to remain vigilant.      

“Both the USA and the EU are cutting imports of electric vehicles from China. The raising of tariffs on EVs, batteries and many other new technology items by the US may push China to dump these products in other markets including India,” GTRI said.

The research body said that it is a moment for India’s Directorate General of Trade Remedies (DGTR) to remain vigilant.

GTRI also pointed to a significant opportunity for India as higher duties on Chinese products such as face masks, syringes and needles, medical gloves, and natural graphite could open significant opportunities for the Indian goods.

“This shift presents a significant opportunity for India. By ramping up production and export of these in-demand products, India could enhance its trade footprint in the US market,” GTRI said.

India, however, may not get any export advantage in sectors like the EVs and semiconductor as India is the net importer of these products.

Biden targets ‘China’s Unfair Trade Practices’

Announcing the increased tariffs on Chinese imports, the White House said, “China’s unfair trade practices concerning technology transfer, intellectual property, and innovation are threatening American businesses and workers.”

“China’s government has used unfair, non-market practices. China’s forced technology transfers and intellectual property theft have contributed to its control of 70, 80, and even 90 percent of global production for the critical inputs necessary for our technologies, infrastructure, energy, and health care—creating unacceptable risks to America’s supply chains and economic security,” the White House said. 

These same non-market policies and practices contribute to China’s growing overcapacity and export surges that threaten to significantly harm American workers, businesses, and communities, it said.

The white house said that it is implementing a 25% tariff on electric vehicle batteries, 25% tariff on the critical minerals, raising tariff on Chinese solar panels from 25 to 50% and putting a 50% tariff on semiconductors made in China. 

“The proposed tariff increases exceed the US’s bound duty commitments at the WTO (world trade organization), potentially violating WTO provisions. The US has increasingly justified these increases under the rarely used National Security clause,” GTRI maintains.

The US-China trade war has seen multiple rounds of tariff increases on a broad array of products since 6 July 2018, when the US administration under President Donald Trump imposed a 25% tariff on $34 billion worth of Chinese goods including industrial products like machinery, motors, and electronic components. 

On 23 August 2018, the US targeted an additional $16 billion in Chinese imports, encompassing electronics, plastics, and railway equipment, also at a 25% duty rate.

On 24 September 2018, conflict escalated again with tariffs extended to cover an additional $200 billion of Chinese goods including luggage and seafood to industrial materials like chemicals and metals. Initially, these tariffs were at 10%, but they were raised to 25% on 10 May 2019.

The most recent increase up to 25% took effect on 10 May 2019, a move by the US in response to perceived backtracking by China on earlier negotiations.