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The US–China Trade War: Impact on India and Other Asian Regions

Author

Listed:
  • Rajesh Chadha
  • Sanjib Pohit
  • Devender Pratap

Abstract

The growing protectionism globally and the outbreak of a major US–China trade war led Indian exports facing higher tariffs. This article has tried to investigate how India should react to the trade tensions between the two largest economies of the world. This will help policymakers in India to assess the impact of the likely developments and choose between different policy responses. In a bilateral US–China trade war, while both the United States and China stand to lose in terms of GDP, exports and imports, India stands to gain. India stands to lose when the US–China trade war applies also to India, which faces higher tariffs from both. India’s losses increase further when India responds by increasing its tariffs on imports from the United States and China. In fact, reducing own tariffs could be a wiser step. Enhancing productivity measures by raising port efficiency and making trade and transport sector more efficient appear to pay dividend. India gains even more from joining the RCEP-like trading block when the United States and China are indulging in bilateral trade war. Last but not least, US–China trade war seems to affect Asian countries, some positively some negatively. JEL Codes: F13, C68, F14

Suggested Citation

  • Rajesh Chadha & Sanjib Pohit & Devender Pratap, 2021. "The US–China Trade War: Impact on India and Other Asian Regions," Journal of Asian Economic Integration, , vol. 3(2), pages 144-168, September.
    • Handle: RePEc:sae:jfasei:v:3:y:2021:i:2:p:144-168
    DOI: 10.1177/26316846211038223
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Trade policy; tariffs; computable general equilibrium modelling; India; US; China;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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