India may become dumping ground for Chinese goods as US raises duties on EVs, chips: GTRI

The US on May 14 levied steep tariff hikes on various Chinese imports, including EV batteries, computer chips and medical products escalating the trade war between America and Beijing.

India may become a dumping ground for Chinese products such as Electric Vehicles (EVs) and batteries, with intensifying attempts by the US to lower reliance on Beijing by raising tariffs on these goods, Global Trade Research Initiative (GTRI) said in a brief on May 14.

"Both the USA and the European Union (EU) are cutting import of Electric Vehicles from China. The raising of tariff on EVs, batteries and many other new technology items by the US may push China to dump these products in other markers including India," GTRI said.

The private trade think tank also highlighted the need for India to remain vigilant to avoid dumping of Chinese goods in view of the recent developments.

The US on May 14 levied steep tariff hikes on various imports, including EV batteries, computer chips and medical products escalating the trade war between America and Beijing.

While the US will quadruple EV duties to over 100 percent in 2024, it will double tariffs on semiconductors to 50 percent by 2025, the White House said in a statement citing "unacceptable risks" to its domestic economic security posed by what it termed as unfair Chinese practices of flooding global markets with cheap goods.

"In response to China’s unfair trade practices and to counteract the resulting harms, today, President Joe Biden is directing his Trade Representative to increase tariffs under Section 301 of the Trade Act of 1974 on $18 billion of imports from China to protect American workers and businesses," the White House said in a statement on May 14.

GTRI added that the proposed tariff increases exceed the US's bound duty commitments at the World Trade Organization (WTO), potentially violating WTO provisions. The American government has justified these increases under the rarely used National Security clause.

However, higher duties on Chinese face masks, syringes and needles, medical gloves and natural graphite provides a significant opportunity for India, GTRI's founder Ajay Srivastava said, adding that the South Asian nation could ramp up production and exports of these products to enhance its trade footprint in the US market.

But, "India may not get any export advantage on remaining products like EVs, semiconductor as it a the net importer of these products," the brief added.

New Delhi has been doing its bit to attract investments in EVs. Last month, the government unveiled a new policy for the sector slashing import taxes to 15 percent from 100 percent on some models if a manufacturer commits at least $500 million and sets up a factory too.

"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," GTRI's Ajay Srivastava said in the brief.