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Home / Opinion / Online-views /  Donald Trump’s trade war has wrecked the liberal order

When elephants fight, it is the grass that suffers. That spectre is now haunting almost every country in the global trading system. An unstoppable rogue elephant is running amok trampling on any rule, convention, treaty and order or framework that comes in its way regardless of the consequences.

“Decades from now, we may look back at the first weeks of June 2018 as a turning point in world history: the end of the liberal order," writes Kori Schake of International Institute of Strategic Studies, in an article Is it the end of America’s World Order in the New York Times on 18 June.

US President Donald Trump, according to Schake, rejected associating his country with the “rules-based international order" at the just-concluded summit of Group of Seven (G-7) countries in Quebec, Canada, 10 days ago. Trump threatened his closest allies, Germany, Japan, and Canada, among others, with trade war.

His relentless bullying has left his closest allies in tatters.

On late Monday evening, Trump intensified his trade frictions with China, the world’s second-largest economy. He threatened another $200 billion in tariffs on Chinese products in response to Beijing’s prompt decision to stand firm by imposing retaliatory tariffs on $50 billion worth of American goods on 15 June, after Trump slapped the $50 billion in additional tariffs on Chinese goods over alleged intellectual property theft and forced technology policies that require foreign companies to share their technologies with the local Chinese companies in joint ventures.

He has now directed his trade representative, ambassador Robert Lighthizer, to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10%. After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs it has recently announced, Trump said. “If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200 billion of goods," Trump said, according to an alert issued by Washington Trade Daily of 19 June.

“The trade relationship between the United States and China must remain equitable," Trump said. China’s decision to impose retaliatory tariffs on American goods “clearly indicates its determination to keep the United States at a permanent and unfair disadvantage, which is reflected in our massive $376 billion trade imbalance in goods".

“This is unacceptable. Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States," Trump thundered, signalling his resolve to wreck the international trading system, come what may.

It remains to be seen what the Trump administration would do in response to India’s retaliatory measures on American products worth more than $240 million, when it comes into effect on Thursday.

India justified its action as a safeguard measure following the imposition of 25% and 10% of additional duties on steel and aluminium goods of more than $1 billion from India. Trump has repeatedly chastised India on grounds that it is not offering fair market access to American goods, especially Harley Davidson motorcycles, among other items.

On a separate track, India is currently lobbying hard for retaining the benefits of around $6 billion for Indian textiles and leather products under the generalized system of preferences for textiles and leather items. Last week, commerce minister Suresh Prabhu was busy making a strong case as to why the US must continue with the GSP scheme.

But, in return, the US wants enhanced market access for dairy products and medical instruments and devices. Clearly, the Trump administration, which is known for its coercive trade policies, will not leave India off the hook easily when it comes to pocketing concessions from its trading partners, whether small or big.

It remains moot whether the Narendra Modi government will forgo the interests of small livelihood producers of dairy products who brought “Operation Flood" and “White Revolution" launched by Verghese Kurien in the 1970s. That revolution enabled India to remain self-sufficient in dairy products.

In short, Trump’s trade war against each and everyone has almost wrecked the so-called rule-based asymmetrical international trade order that Washington built over the past 70 years for pursing its hegemonic interests. Ironically, his actions seem somewhat like what the world witnessed from an infamous German Kaiser of 1930s and 1940s. Unless nations remain united for a credible trading system with a human face, Trump’s trade measures could succeed for the time being.

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