After US tariff walls, Beijing might dump products in India, warns think tank

With the Joe Biden administration erecting punitive tariff walls on imports from China, a Delhi-based think tank has expressed the apprehension that India could become a target for dumping by its prickly northern neighbour for items such as electric vehicles and batteries.

On Tuesday, the White House raised import tariffs on some items such as electric vehicles (from 25% to 100%), EV batteries (7.5% to 25%), solar cells (25% to 50%) and steel and aluminium (0%-7.5% to 25%).

“Both the USA and the European Union (EU) are cutting imports of electric vehicles from China. The raising of tariffs on EVs, batteries, and many other new technology items by the US may push China to dump these products in other markets, including India,” mentioned Global Trade Research Initiative (GTRI) in a report.

The need of the hour, GTRI has cautioned is the need for India to keep a strict vigil on the possible strategy by Beijing.

Dumping is universally considered an unfair trade practice. It occurs when a country exports an item at a price which is lower than that for which it is available in the domestic market of the exporting country. While announcing the stiff tariffs on Chinese products, Biden said it would protect US workers from the glare of unfair trade practices.

Addressing the nation from the Rose Garden of the White House, Biden said Americans are free to buy any car they want, but his government won’t allow China to have unfair control of the market for these cars. “I want fair competition with China, not conflict. We are in a stronger position to win that economic competition of the 21st century against China than anyone else because we’re investing in America again,” the US president said.

Significantly, China replaced the US as India’s biggest trading partner in FY24 with a trading value of $118.4 billion while that between India and the US stood at $118.3 billion. The US was India’s largest trading partner country in FY22 and FY23.

For years the US and China have been locked in trade battles with the Biden administration alleging that Beijing has funnelled money from the public exchequer into Chinese businesses across industries such as solar panels, steel, aluminium, semiconductors, electric vehicles, health equipment like masks and gloves.

GTRI’s founder Ajay Srivastava stated that higher tariff walls on Chinese face masks, syringes and needles and medical gloves could be utilised by India to export these items to the US. However, his note also mentioned India is not likely to derive any benefit in semiconductors and EVs since the country is a net importer of these products.

“The US and European Union (EU) are taking active measures to cut reliance on China. With stagnant exports and rising imports from China, India may also need a China strategy,” Srivastava added.