Global Trade Research Institute (GTRI) has said in its latest report that India should proceed very cautiously in the negotiations with America and it should focus on its self-reliance instead of depending on Washington. In this report, GTRI has analyzed the impact of new tariffs imposed by America on China and the strategy to be adopted by India.
America imposed 100% additional duties on China
US President Donald Trump on Friday announced the imposition of an additional 100% tariff on Chinese imports, bringing the total duty to nearly 130%. These new charges will be applicable from November 1. This step is considered to be the biggest increase in US-China trade tensions after the 2018 tariff war. Washington’s action is in response to China imposing strict restrictions on the export of rare minerals – these minerals are vital to America’s defense, clean energy and technology sectors.
India should negotiate on ‘basis of equality’
GTRI said that India should enter into agreements with the US ‘on an equal basis’ and no agreement should be considered final. The report suggested that India should protect its strategic autonomy while ensuring mutual benefits. The think tank warned that India should prioritize self-reliance in critical technologies and minerals rather than relying on ‘changing US promises’ to protect the economy from future trade shocks.
The report suggested that India should use its neutral stance to further strengthen relations with both Western countries and BRICS countries. This will help India play a balanced role in the global supply chain.
New tariff war will increase prices, impact on supply chain
Due to new trade tensions between America and China, there is a possibility of increase in the prices of electric vehicles, wind turbines and semiconductor parts. According to the report, if America seeks support from its allies, the cost may increase further because no country can quickly become an alternative to China’s hold in rare minerals. GTRI said that America will try to divert its mineral supply chain towards Australia, Vietnam and Canada, while China will strengthen alternative industrial networks by increasing supplies to its non-Western allies.
America may be left with no option other than an agreement with China
The report said that considering the importance of rare minerals, America will soon have no option but to make a new deal with China. GTRI commented, ‘The US often takes actions without weighing the economic consequences, while China acts more thoughtfully and with better preparation.’