Photo: AP
Photo: AP

Quick edit | Trade war prospects

Some Chinese firms might need to move production out of China for their products to stay competitive in the US

America invoked “national security" to fire its first trade salvo last year, imposing import tariffs on steel and aluminium. As its recent talks with China faltered, it slapped Chinese imports worth $200 billion with a 25% levy and may soon include another $325 billion worth of goods—mainly consumer products. Beijing retaliated on Monday by erecting barriers against $60 billion of US goods. It had earlier burdened American farm exporters in a few electorally-sensitive “swing states" such as Iowa. The economic impact of the hostilities is hazy, but it’s clear that both sides will suffer as costs rise and supply chains go awry.

Among the fallouts of this trade war could be companies rejigging their cross-border supply networks. Some Chinese firms might need to move production out of China for their products to stay competitive in the US; rising wages there are another push factor. A few such firms are eyeing India. This is an opportunity that we must not miss. So far, the US has objected to the re-routing of Chinese exports that sneak into America via ports in other countries. Factories relocated elsewhere, however, should not bother Washington.

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