China-US trade war just escalated into its worst week putting India on watch

• China has decided to slap levy on nearly everything it imports from the US in the ongoing tit-for-tat tariff war with the US.
• India has postponed levying its own set of retaliatory tariffs on US goods.
  
• Indian industry is not immune from consequences of trade war with ongoing implications for currency and stocks.

After the US said earlier this week that it would impose 10% levy on $200 billion (₹14.5 trillion) on Chinese imports, China has hit back.

The ongoing tit-for-tat tariff war between the US and China has taken another ugly turn with China planning to impose retaliatory tariffs on nearly everything it imports from the US.

China is planning to slap tariffs on $60 billion-worth of American imports after the US said earlier this week it would impose 10% levy on $200 billion on Chinese imports in the coming week. The levy would increase to about 25% by 2019.

The US had earlier imposed tariffs on nearly $50 billion (₹3.6 trillion) on Chinese goods, which China has also matched. Lead by US President Donald Trump’s protectionist policies, the punitive trade measures are aimed at pressuring China to halt what it terms “predatory” and “unfair” trading practices. It has also accused China of stealing US technological know how from American companies in exchange for allowing access to the vast Chinese market.

India to wait and watch

While India has also been subject to US tariffs of 25% on steel and 10% on aluminium exports, it has reportedly decided to postpone levying its own set of retaliatory tariffs on certain US goods it had planned earlier this year.

According to an Economic Times report, the US has granted a conditional waiver to India on imposing the steel and aluminium tariffs by exempting a certain percentage of these imports from tariffs. India has been seeking a complete waiver and had indicated in June that it would in turn impose levies on 29 American goods and products including apples, walnuts and almonds.

However, it now appears, India is keen on averting a trade war with the US and will now evaluate its tariffs plans on US imports in November. India also recently entered into a strategic partnership with the US, signing a key communications agreement that would help the two countries better coordinate military exercises in the region and gain access to certain US defense technology.

But India is not immune from the consequences of the China and US trade war, which has already battered Asian stock markets with experts worrying about a long-term economic slowdown that could have a domino effect on emerging markets including India. In recent weeks, the Indian stocks markets have remained volatile with the Indian rupee plunging to its worst value compared to the US dollar.

In July, a parliamentary panel in India warned of Chinese exporters dumping products into India with devastating consequences on Indian manufacturers, and a widening trade deficit with China.