Trump set to amplify Biden’s tough stance with tariffs and export controls

The loaded guns are out for the two largest economies of the world, the US and China, even before the original hard hitter Donald Trump takes charge as the new President in January next year. In one of his last “Containing China” measures outgoing President Joe Biden has imposed additional export controls on high-end chips, chip-making equipment to China, which can be used as components or in the manufacturing of weapons as well. The new restrictions also directly target some of the largest chipmakers in China, thus throwing in as many road blocks as possible in the dragon’s aggressive weaponisation programme. Not, to be cowered China imposed retaliatory controls on the export of critical minerals such as Gallium, Antimony etc, which are essential components of the chips.

Even as these measures were being announced, President-elect Donald Trump has been threatening the 9 member BRICS nations with severe 100 per cent tariffs, in case, they choose to create an alternate global currency to the dollar. Mr Trump has already threatened Canada, Mexico and the EU with the tariffs scalpel unless they come back to him with offers that are hard to ignore. Trump’s third favourite word is tariffs, which he uses as leverage to negotiate trade deals with allies and enemies.

The nations that have faced the latest threat of high tariffs from Donald Trump have already taken a cautionary approach to negotiating with the tough business person. Canada and Mexico have sounded out that would be more interested in sweetening the deal with the US under Trump, than confronting him on the tariff issues. China knows that Trump would be higher on optics, than his predecessor Joe Biden, on issues where the US considers them as a direct threat. In one of the recently published editorials in the Chinese government mouthpiece Global Times, the Internet Society of China, the China Association of Automobile Manufacturers, the China Semiconductor Industry Association, and the China Association of Communications Enterprises are quoted to have issued statements terming US chips as unsafe and unreliable.

It further states “The US has used this measure to greatly expand its power, affecting many countries and regions, including Japan, the Netherlands, Israel, Malaysia, Singapore, South Korea, and China’s Taiwan region. This will severely disrupt the stability of the global industrial and supply chains and undermine the international economic and trade order.” 

Incoming President Trump is likely to have a harder stance on export controls and, high tariffs for China imports. The incoming administration is likely to focus on high decibels, high optics, and control China measures than what the Joe Biden administration has achieved. It would be worthwhile to note, that some of the restrictive measures against China introduced, during Trump’s first presidency, have only been upgraded and made tougher under President Joe Biden.

Therefore at some level, there is bipartisan support for containing China in the US government.India has been watching this space carefully and knows well that it cannot escape the US tariff cannon for too long. It is also well aware that, there is a trade surplus with the US, which means it exports more than imports. Incoming President Trump even though has good relations with Indian PM Modi, is hardly going to miss this infraction. Obviously, the only safe prediction is a degree of unpredictability. Different countries have had their own experiences from the first Administration and would presumably draw from that to approach the second. Naturally, between two major economies, there will always be some give and take. When we look at economic or technology domains, the case for trusted and reliable partnerships have actually increased in recent years. A lot of what lies ahead would be in fashioning terms of engagement that are perceived as mutually beneficial. “A careful recalibration of India’s trade relations is on the anvil, not just with the US, but also with its other allies.

(The writer is a policy analyst; views are personal)