Walmart announced Thursday that it will triple its exports of goods from India to $ 10 billion a year by 2027 as a nationwide pivot to other trading partners strengthens during the ongoing US-China trade war.
Imports of US goods from China fell by a staggering 16.2 percent between 2018 and 2019, as the effects of Washington’s aggressive stance on Beijing take effect.
Currently, according to the Alliance for American Manufacturing, Walmart estimates that Chinese suppliers make up 70-80 percent of US merchandise.
After increasing tariffs on exports from China under President Trump, many other, mainly Asian, countries are now seeing a marked increase in trade with the US.
According to a study by the UN Conference on Trade and Development examining the magnitude of trade diversion from the trade wars, the biggest beneficiaries are: Taiwan, Mexico, the EU, Vietnam, Japan, Canada, Korea and India.
A report by Moody’s revealed similar effects, noting in particular that Chinese buyers of soybeans are turning to Brazilian soy farmers instead.
Meanwhile, trade with India only appears to be on the rise, with the imminent arrival of Joe Biden’s new government, experts say.
Trade in goods and services between the US and India was estimated at $ 146.1 billion in 2019, with exports amounting to $ 58.6 billion and importing $ 87.4 billion. According to the Office of the United States Trade Representatives, this was 6.3 percent ($ 3.4 billion) from 2018 and 172.6 percent more than in 2009.
India is currently the United States’ ninth largest trading partner, with a total of $ 92.0 billion in two-way goods trade in 2019.
During the same period, imports of U.S. goods from China were $ 451.7 billion in 2019, down 16.2 percent ($ 87.6 billion) from 2018, but an increase of 52.4 percent from 2009 China is still the largest supplier of US goods imports, but the decline is strong.
Despite the fact that a phase one trade deal was signed with China early this year, experts say the US has failed to address the underlying tensions of the previous trade war.
Trump put his complaints about the US-China trade deficit at the center of his 2016 election bid, stating that his intention was to close the $ 346 billion gap and “ get a better deal with China that would allow US companies and workers helps to compete “.
The president launched a trade war to pressure Beijing to implement changes in aspects of its economic system that are perceived to allow for unfair Chinese trading practices, including forced technology transfers, limited market access, intellectual property theft and subsidies to state-owned companies .
Between July 2018 and August 2019, the US announced plans to introduce tariffs on more than $ 550 billion worth of Chinese products, and China retaliated with tariffs on more than $ 185 billion worth of US goods.
A September 2019 study by Moody’s Analytics found that the trade war had cost the U.S. economy nearly 300,000 jobs and an estimated 0.3 percent of real GDP.
A notable victim of tariffs imposed by China on U.S. imports were the chains of cheap dollar stores, some of which sought to diversify their trading partners, says Dr. Michael Plouffe, lecturer in International Political Economy and International Trade Policy at University College London. This included buying plastic party cups from Vietnam, rather than from China.
“Any shift in trade will be spread across a range of countries. I think it’s mainly based on which countries have the manufacturing base to produce what US importers need,” said Dr. Plouffe. Newsweek.
“The cases most affected are those of lower value and added value. Things that generally do not require significant upfront investment from manufacturers. That’s the easiest to move when it comes to finding a new exporter. “
He says India, the largest democracy in the world, with a population of 1.35 billion, will be a particularly attractive prospect for the US to engage in more developed trade relations.
“One of the more empirical things we see with trade is that democracies trade with each other more often. The fact that India is a democracy makes a trade deal that covers a wide range of things more likely. Point, it will be more about it. reverse the effects of trade war instead of making progress with relations, ”says Dr. Plouffe.
Dr Swati Dhingra, a lecturer in the Department of Economics at the London School of Economics, and a member of the Center for Economic Performance, says the size of the market is the key to establishing a positive traditional relationship with the US.
“India is such a huge market, so it is in the interests of Netflix and the like to establish themselves there,” said Dhingra. Newsweek.
Ford Motors has a factory in India that exports cars to nearly 40 countries. Meanwhile, ExxonMobil has conquered much of the lubricants market in India and American companies such as PepsiCo, Coca-Cola, MacDonald’s, Nike, Amazon and Pfizer are household names in India. The presence of these multinational corporations means that the US has a vested interest in continuing to grow in economic ties with New Delhi.
Dhingra adds that India also offers benefits when it comes to services, thanks to its highly skilled workforce. “India invests heavily in quality tertiary education, often at the expense of everything else,” she says.
Google has 6,500 employees in India, which makes up 6 percent of the company’s total global workforce. Microsoft also has a large workforce in the country and established operations there shortly after its initial founding.
Trade relations between the two countries only seem to be growing, with the arrival of Biden’s new government. “Modi is extremely pragmatic,” says Dr. Dhingra. “So I don’t see why he won’t take any opportunity to strengthen trade relations with the US – India certainly recognizes what a great trade and investment partner the US is to them.”
She adds, “I think diversification is here to stay. I think just as much because of COVID, and the effects it has had on changes in supply – governments see there is more of an incentive to diversify.”
Whether it is or not, the transfer of power in Washington will also change the tenor of Washington-Beijing relations. While President-elect Joe Biden hinted last week that he will continue to press Beijing with a promise to fight “ unfair trade practices, ” Plouffe says this will no doubt be done with a softening of the US position.
“We are likely to see a shift in the rhetoric used around the trade war and a more serious effort to get China back to the table and implement reforms on key issues Trump was trying to achieve,” he said. “With this less confrontational approach, there is a greater likelihood that something will be done, and you will see a reduction in rate levels as both parties move forward. Assuming both parties stick to it.”