US Tariff Wars
While the United States and China are already engaged in a massive trade war which is also impacting other countries, President Trump has attacked the World Trade Organization for refusing to recognize the fact that the nations of India and China are no longer developing nations,?
Why is it in the news?
The US President Donald Trump has claimed that the nations of India and China are no longer “developing nations” and they should stop to benefit from taking advantage of this tag from the World Trade Organization (WTO).
Why is this happening?
- Donald Trump had pushed for an America First policy during his election campaign.
- After his election, he has criticized India for levying high tariffs on US products which impact their sales in Indian Markets.
- President Trump has criticized the WTO for its lenient definition of a developing nation which he claims, has allowed nations like China, India and Turkey to benefit from the lenient wording of the global trade rules.??
What privileges do the developing countries have?
As per the WTO rules, a developing country has the claim to a longer timeframe for the imposition of multiple safeguards, benefits from a generous transition period, has beneficial tariff cuts and are able to avail certain export subsidies for themselves.
How is the US economy affected?
When a nation imposes a high tariff on an American product, it effectively makes the US product more expensive in that market. This impacts the sales and consumption of the American product and is detrimental to the US Economy.
How China has responded?
- China slammed retaliatory tariffs against over USD 75 billion worth of U.S. goods on 23rd August 2019 which them in the additional 10% taxes which are top of the existing rates.
- China has declared that it would impose additional tariffs of 5% or 10% on over 5,078 products which originate from the United States.
- These include agricultural products like soybeans & crude oil and manufacturing like small aircraft.
- It has also reinstituted tariffs on the cars and auto parts which are made in the United States.
Category: Economy & Banking Current Affairs