US-China trade war affected global trade: Needed an Apple encore

Source: The post US-China trade war affected global trade has been created, based on the article “Needed an Apple encore: India can do better in electronics exports” published in “Business standard” on 12th April 2024.

UPSC Syllabus Topic: GS Paper 2- International Relations-Effect of policies and politics of developed and developing countries on India’s interests,

News: The World Trade Organization (WTO) has lowered its forecast for global trade growth in 2024 from 3.3% to 2.6%.

How has the US-China trade war affected global trade?

US-China Trade War: The US-China trade war started with the U.S. imposing a 25% tariff on about $350 billion worth of Chinese intermediate goods in 2018. Some products like laptops and mobile phones were initially excluded from tariff increases.

Impact on Supply Chain: Despite tariffs, mobile phone imports from China to the U.S. grew by 10-15%. However, imports from other parts of the world increased by over 70%, indicating diversification away from Chinese suppliers.

India’s Position: India’s electronics exports grew from $1.3 billion in 2018 to $8.9 billion in 2023, capturing only 5.5% of the total increase in non-Chinese electronics imports to the U.S.

Other Countries’ Success: Countries like Vietnam benefitted significantly, with electronics exports rising from $12.1 billion in 2018 to $51.2 billion in 2023, making up 28% of the total non-Chinese incremental electronics imports into the U.S.

Why are other countries outperforming India?

India’s Tariff Strategy: India increased tariffs to boost domestic production, which could deter foreign investors and companies looking for stable, low-cost manufacturing bases.

Export Statistics: Vietnam exports electronics to 123 countries, compared to India’s exports to just a couple of dozen, highlighting its broader market reach.

Question for practice:

Discuss the factors contributing to the outperformance of countries like Vietnam over India in terms of capturing a larger share of non-Chinese electronics imports into the U.S.