Trade war escalation: Why India must watch the latest US-China stand-off closely

3 months ago 7

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Beijing has accused Washington of double standards and defended its export controls.

Summary

Trump’s new 100% tariff threat against China was provoked by Beijing’s move to weaponize its rare earth chokehold further. Does this mean it’s a gambit China may win? India has both geopolitical and economic reasons to watch how this plays out.

Last week, US President Donald Trump threatened fresh tariffs on China. He cited Beijing’s “extraordinarily aggressive" policy stance, referring to its tightened licensing rules for rare-earth exports, to justify his plan of an extra 100% levy on Chinese imports plus tighter US export clamps from next month. Trump might also cancel an upcoming meeting with China’s leader Xi Jinping.

Meanwhile, Beijing has accused Washington of double standards and defended its export controls; by its claim, these are designed to “better safeguard world peace and regional stability."

But none of this can disguise what’s afoot: another episode of who’ll blink first in a trade war that’s clearly good for neither. Their mutual dependence is high. Beijing might calculate that it can bear lost access to the US market longer than America Inc can bear a rare-earth crunch, given the role these inputs can play in tech supremacy.

Since Pakistan recently made a mineral-supply pitch to the US, even if it’s just a bluff, India must watch the geopolitics of the latest stand-off. As for a trade edge over China on the back of a new tariff gap, it’ll prove elusive if Beijing stares the White House down. China, don’t forget, began this round.

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