he US government announced it would end the preferential trade treatment for India – in place since the 1970s – from June 5. The trade privilege, widely regarded as one of the US’s ways to keep India close, allowed US$5.6 billion worth of Indian exports to enter the US duty free, reported the overseas edition of Party-run newspaper the People’s Daily
Writing on the issue in the newspaper, Dai Shangyun, a staff commentator, cited a commentary from Reuters, saying this not only represents the toughest measure the Trump administration has taken against India, but also opens a new battlefront in the global trade war.
While it seems to stem from India’s new rules on foreign direct investment in e-commerce which delivers a heavy blow to American giants Amazon operating in the country, there are more deep-seated causes, Dai argued.
For some time, India has purchased S-400 air-defense missiles from Russia and hoped to continue buying oil from Iran in spite of the US’s sanctions. That the country seems unwilling to take the US’s side on major issues triggers concern in Washington. The Trump administration wants India to maintain closer cooperation with the US and win India’s support for its geopolitics in the Asia-Pacific. Thus bilateral trade has become one of its tools to pressure India, Dai said.
India aside, Trump announced recently a tariff increase on Mexico of 5 percent per month, until illegal immigration through the US-Mexico border is solved.
While reducing trade deficits has always been the primary objective of Trump’s tariff strategy, it is the result of economic globalization – the US has moved much of its manufacturing out of the country – and its maintaining the greenback's strong position through different financial measures. The tough trade policies against rivals and allies alike have cast a shadow over its alliance system.
And instead of benefiting the country, the trade war is doing the opposite. Consumers will bear the direct costs, as with more tariffs come higher retail prices. The global supply chain that American businesses have grown reliant on is being severely impacted by the trade war, the commentator warned.