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India Gained $755 Million in Additional Exports to US: UNCTAD Report

Owing to the ‘Trade Diversion’ effects of the America’s tariff war with China, India gained about $755 millions in additional exports, mainly of chemicals, metals and ore, to the USA in the first half of 2019. This was stated in recent report released by the United Nations Conference on Trade and Development (UNCTAD).

The study, ‘Trade and Trade Diversion effects of United States tariffs on China’, shows that the ongoing US-China trade war has resulted in a sharp decline in bilateral trade, higher prices for consumers and trade diversion effects – increased imports from countries not directly involved in the trade war.

The tariffs have made other players more competitive in the US market and led to a trade diversion effect. These trade diversion effects have brought substantial benefits for Taiwan, Mexico, and the European Union.

The US tariffs on China resulted in India gaining $755 million in additional exports to the US in the first half of 2019 by selling more chemicals ($243 million), metals and ore (USD181 million), electrical machinery ($83 million) and various machinery ($68 million) as well as increased exports in areas such as agri-food, furniture, office machinery, precision instruments, textiles and apparel and transport equipment.

The study found that tariffs imposed by the United States on China are economically hurting both countries and that consumers in the US are bearing the heaviest brunt of Washington’s tariffs on Beijing, as their associated costs have largely been passed down to them and importing firms in the form of higher prices.

The analysis shows that US tariffs caused a 25 per cent export loss, inflicting a $35 billion blow to Chinese exports in the US market for tariffed goods in the first half of 2019. This figure also shows the competitiveness of Chinese firms which, despite the substantial tariffs, maintained 75 per cent of their exports to the US. Though the study does not examine the impact of the most recent phase of the trade war, it warns that the escalation in summer of 2019 is likely to have added to the existing losses.

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