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Saturday, 15 June 2019

Will US-China Trade War Will Lead to Dumping of Chinese Steel


The trade war between USA and China is in the open air, and the devastation of the same is about to be exposed soon. Different nations will experience the same as both countries are imposing tariffs on the products of their rival nation. India is the second largest steel procuring nation of the world, but the quality of the steel produced here is not up to the mark. Hence steel from China is what India needs, but with the increase of tariff in the US, China is going to create havoc in the industry, according to ETV Bharat News.
In this context, different associations related to steel has appealed to the ministry of steel authority of India to safeguard the duty levels to at least 25%. If this inconsistency pursues, according to ETV Bharat, China will be dumping steel to the Indian market through other countries like Vietnam or Japan.
Under such conditions, pricing control of the steel and the steel products in India will create a buyers market, with China selling steel at lower costs than its manufacturing costs. Steel levis when hiked for the trade war between two giant nations, China will target the Indian market, which may lead to a slump in the industry and economy.
Only the control over duties to at least 25% is going to work for India, but ETV Bharat states that according to the Association, controlling the import is going to be tough, as the government, busy with the election till now has no time to take up the issue and analyse it thoroughly. Trade authorities and import and export associations of India are continuous in complaining that China is pushing India to import many things like electronics, toys, steel, and even some forms of F&B, while India is into exporting milk products and apples.

The matter is complex for some, but let’s break it down for simplicity:

  1. Due to the increase of tariff of China products, steel, toys, and electronics will be exported to the US at a decreased volume, and since that tariff is not applicable in India, the excess amount will be pushed to India.
  2. Tata, Jindal, and Sail, the biggest importer of the steel will be tempted to purchase the excess steel at lower costs to increase their profit margins.

  1. Higher-quality of Chinese steel in comparison to the Indian steel will also drive the decision.

  1. Naturally, the stock and inventories of steel with manufacturers across the country are poised to increase leading to a downturn in an industry still struggling to regain its former glory.

Increase of tariff from India is the only solution, but will the Indian government do the same and get involved in the trade war with the Giant economy at her border? The Indian economy is at present 1/4th with respect to China’s economy. Can it risk the tariffs and create its battle with the neighbouring country? How will the Steel Industry react and recover from the losses they are likely to face should China start importing lower-priced steel into the market?

Read more about the friction between two giants of the international economy on ETV Bharat News and familiarise yourself with the future of the Indian economy. You can follow up on all the news related to trade wars and get in-depth analysis at the site.

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