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From Turkey to India, priciest food since 1970s is a big challenge for governments

Whether for bread, rice or tortillas, governments across the world know that rising food costs can come with a political price. The dilemma is whether they can do enough to prevent having to pay it.

Global food prices were up 33% in August from a year earlier with vegetable oil, grains and meat on the rise, data from the United Nations Food and Agriculture Organization show. And it’s not likely to get better as extreme weather, soaring freight and fertilizer costs, shipping bottlenecks and labor shortages compound the problem. Dwindling foreign currency reserves are also hampering the ability of some nations to import food.

From Europe to Turkey and India, politicians are now handing out more aid, ordering sellers to cut prices and tinkering with trade rules to mitigate the impact on consumers.

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The issue is more acute in emerging markets where the cost of food accounts for a greater chunk of household spending, and in crisis-hit nations. In Lebanon, militant group Hezbollah has tightened its grip on the country by distributing food. But even the U.S. is taking action to address affordability made more urgent during the coronavirus pandemic.

“Governments can intervene and commit to supporting lower consumer prices for a while,” said Cullen Hendrix, non-resident senior fellow at the Peterson Institute for International Economics, a Washington-based think tank. “But they can’t do it indefinitely.”

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Food inflation spurred more than two dozen riots across Asia, the Middle East and Africa, contributing to the Arab Spring uprisings 10 years ago. Pockets of discontentment are growing again. Unrest in South Africa triggered by the arrest of former President Jacob Zuma in July turned to food as people looted grocery stores and restaurants. Shortages in Cuba led to the biggest protests in decades.

Adjusted for inflation and annualized, costs are already higher now than for almost anytime in the past six decades, according FAO data. Indeed, it’s now harder to afford food than it was during the 2011 protests in the Middle East that led to the overthrow of leaders in Tunisia, Libya and Egypt, said Alastair Smith, senior teaching fellow in global sustainable development at Warwick University in the U.K.

“Food is more expensive today than it has been for the vast majority of modern recorded history,” he said.

Tunisia: Crisis Management
The ground zero for the Arab Spring protests, Tunisia has raw memories when it comes to food and politics. Just a few days after dismissing the government and suspending parliament in July, President Kais Saied urged producers and retailers to slash prices of selected produce.

Red meat prices fell by about 10% almost instantly, with the nation’s main business lobby group Utica announcing unspecified cuts in prices for staples ranging from wheat flour, meat, to dairy, coffee and soft drinks. Fruit prices fell by as much as 20%, Tunisian media reported. Still, consumer prices overall rose at an annual rate of 6.2% in August.

Then there’s the prospect of subsidy cuts. A debate is raging about a long-planned shift to focus spending on the neediest citizens as Tunisia tries to secure a new financing program from the International Monetary Fund. That will likely lead to reduced support for items likes flour and sugar as well as electricity for a substantial number of households.

North African neighbors are also looking at subsidy cuts to help fix public finances. In Egypt, President Abdel-Fattah El-Sisi called for a rise in bread prices. Algerian bakers have already hiked prices of subsidized bread in an act of defiance amid a shortage of wheat or shrunk the size of loaves. In Morocco, authorities announced in July a plan that will see cuts to subsidies on sugar and low-cost wheat flour starting next year, subject to the approval of parliament.

Romania: Rethinking Trade
The cost of bread is not just political for grain-importing countries in North Africa and the Middle East. Romania is Europe’s top exporter this season, and yet prices have soared at a double-digit pace. Overall inflation is set to be the fastest in eight years in 2021.

The former eastern bloc country also has a dark history when it comes to feeding its population. Severe shortages were a hallmark of communist dictator Nicolae Ceausescu before he was overthrown and executed in 1989.

Prime Minister Florin Citu’s government wants to cut dependence on imported processed food products as a way to reduce costs and narrow the trade deficit. He is already under pressure after the collapse of his coalition and faced a backlash over his answer to a question about the cost of a loaf of bread. “I don’t eat bread,” he answered.

Romania earmarked 760 million euros ($896 million) for investment in farm storage and processing, Agriculture Minister Adrian Oros said. “We’re one of the biggest exporters of cereals and yet we import frozen bread products,” he said. As of this month, the government is waiting for farmers to submit eligible projects to tap the money over the next two years. However, while Romania’s agricultural potential is one of the biggest in Europe, it so far failed to use EU money to improve its local production.

U.S.: Increasing Aid
Rich countries are having their headaches too as the pandemic hits incomes. In the U.S., the world’s biggest economy, 8.6% of people said they sometimes or often didn’t have enough to eat during the prior week in a survey completed on Aug. 30.

In a reversal from the Donald Trump administration, President Joe Biden is increasing government assistance to low- and middle-income Americans with the biggest long-term rise in food stamp benefits in the program’s history.

The increased dispersal of stamps to buy groceries adds to temporary pandemic measures such as child tax credits and broadened access to school meal programs. Critics have said the government subsidy is inadequate though.

The government in Washington has been showing concern about rising consumer prices as the economy rebounds from Covid-19. It’s taking aim at major meatpackers, charging that “pandemic profiteering” is squeezing consumers and farmers alike.

India: Cutting Duties
With one of the largest malnourished populations, India is also dispersing more aid. Prime Minister Narendra Modi’s government is distributing 20.4 million tons of free rice and wheat, spending 672.7 billion rupees ($9.1 billion) on extra grains subsidies to reach potentially more than 800 million people.

The country has also implemented trade measures to shield consumers from spikes in global prices. The government has cut duties on palm, soybean and sunflower oils as well as lentils.

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India isn’t the only nation to use trade to intervene in the food market. War-torn Syria has tightened imports of items ranging from cheese to cashew nuts to safeguard its dwindling foreign currency reserves for wheat purchases. Argentina and Bolivia have curbed exports of beef to keep prices at home in check, as has drought-hit Kazakhstan, which forbade exports of oat, rye and forage and added quotas for forage wheat.

Turkey: Market Action
In Turkey, President Recep Tayyip Erdogan’s popularity has slumped because of the economy and cost of living. Food inflation accelerated for a fourth month in August, to 29%.

The government is making another attempt to control prices through threats of fines for businesses selling at elevated prices to an investigation into higher costs. Trade ministry officials are ordered to inspect allegations of excessive price increases in food products at wholesale markets in major Turkish cities, including Istanbul, Ankara and Izmir.

Erdogan’s government is also working on some legislative changes to curb food inflation. From October, fresh fruit and vegetables that may have been wasted on farms will be brought to an online market, and an early weather warning system will be put in place to spot potential supply shocks. There’s also the prospect of tax incentives and more trade measures. Turkey removed import duties on grains and lentils on Sept. 8.

Russia: Losing Battle

The world’s top grains exporter shows the limitation of adjusting trade rules to curb prices. Russia introduced a wheat export tax in February, but it’s also paying with a loss of market share. The nation’s wheat is no longer as competitive, derailing exports to Egypt, one of its biggest customers.

At home, the measures haven’t helped curb food inflation, either. It’s hovering at a five-year high. Domestic wheat prices jumped in August to levels typically not seen this time of year as farmers and traders were reluctant to sell.

(With assistance from Souhail Karam, Irina Vilcu, Mike Dorning, Nariman Gizitdinov, Cagan Koc, Jihen Laghmari, Yuliya Fedorinova, Pratik Parija and Amogelang Mbatha)

John Kerry aims to talk US back into a lead role in climate fight

WASHINGTON: From a wood-paneled library in his Boston mansion, new climate envoy John Kerry is talking the US back into a leading role in global climate action, making clear the nation isn’t just revving up its own efforts to reduce oil, gas and coal pollution but that it intends to push everyone in the world to do more, too.

Kerry‘s diplomatic efforts match the fast pace of domestic climate directives by the week-old Biden administration, which created the job Kerry now holds.

Those directives include a Biden order expected on Wednesday spelling out how US intelligence, defence and homeland security agencies should address the security threats posed by worsening droughts, floods and other natural disasters under global warming.

At 77, Kerry is working to make a success out of the global climate accord that he helped negotiate in Paris as President Barack Obama’s secretary of state — and that he then saw rejected by President Donald Trump, who also spurned all other Obama-era legacy efforts to wean the US and global economies off climate-damaging fossil fuels.

Success for Kerry is hardly assured. At home, he faces pushback from the oil and gas industry and hears concerns that jobs will be lost.

Internationally, there’s uncertainty about whether Biden’s climate commitments can survive the United States’ intensely pided politics, let alone the next presidential transition.

Meanwhile, environmentalists are pushing him to be aggressive — even demonstrating outside his house on his first full day on the job.

Underscoring the urgency, Kerry – working from his home on Boston’s patrician Beacon Hill during the Covid-19 pandemic – sat before a computer screen and started talking before sunup last Thursday, his first full day in his new job, to a global business forum in Europe.

Since then, he has spoken virtually with US mayors, foreign presidents and premiers, government ministers and others, until the light from the setting sun slides down the gilt spines of the shelves of leather-bound books in his library.

Kerry exhorts: Put your big one-off Covid-19 economic recovery funding into projects that boost cleaner energy.

Get green projects going fast in Republican-leaning US states to prove renewable energy can mean jobs and build needed political support.

Get everyone to talk to China about things like stopping the building of dirty-burning coal-fired power plants.

If China and the US, as the world’s No. 1 and 2 top carbon emitters, don’t spell out exactly how they will curb climate-damaging emissions more quickly, “we’re all going to lose credibility,” Kerry told an online gathering of American mayors last weekend.

The US has to have the “credibility to go to the table, show people what we’re doing and push them to do more,” Kerry said then.

“So everybody can can understand it’s not fake, it’s not a phony, empty promise — it really is getting real.”

Kerry is a full-time principal member for climate on the White House’s national security council.

The role acknowledges what climate and military experts say will be growing conflicts around the world as climate change increases competition for natural resources.

It takes into account a lack of US readiness to protect military installations and overall infrastructure from worsening flooding and other natural disasters as temperatures rise.

By giving someone of Kerry’s stature a job with equally high prominence, Biden aims to “bring the climate issue into the conversation” on national security matters routinely, said John Podesta, a climate counselor for Obama and a White House chief of staff for President Bill Clinton.

Kerry is expected to have desks at both the White House and the state department.

In the meantime, the home library where Kerry now holds most of his big online meetings earned him a 10 out of 10 from the popular “Room Rater” Twitter account that judges the backdrop décor in people’s Zoom calls and TV appearances.

That’s despite expressing doubt about whether it was a room or a set.

Kerry and other Biden administration climate leaders will be working to set a tougher goal for the US for cutting emissions, as well as making good on pledges to increase climate funding for poorer countries.

On Thursday, the progressive Sunrise Movement’s Boston branch had demonstrators outside his Boston house holding signs saying “Kerry be brave.”

In France, Trump-like TV pundit rocks presidential campaign

A survivor of the terrible journey to Auschwitz remembered how the youngest wailed. There were 99 children squeezed among 751 adults gasping for air, crazed by thirst and hunger, aboard convoy No. 63 that departed Paris at 10 minutes past midday on Dec. 17, 1943.

The 828 murdered at the death camp from that trainload alone included 3-year-old Francine Baur, her sister Myriam, 9, their brothers Antoine and Pierre, 6 and 10, and their parents Odette and Andre.

All born in France, their French citizenship proved worthless under France’s wartime Vichy regime that teamed up with the country’s Nazi occupiers and their extermination of Jews.

So when Andre Baur’s great-nephew, a Paris mayor, was catching up on his Twitter feed recently and saw a claim reported in French media that Adolf Hitler’s Vichy collaborators safeguarded France’s Jews from the Holocaust, he was revolted. Worst still in the eyes of Ariel Weil, mayor of the French capital’s city center, was that the debunked assertion came from a pretender for the French presidency who is himself Jewish.

That person is Eric Zemmour, a rabble-rousing television pundit and author with repeated convictions for hate speech who is finding fervent audiences for his anti-Islam, anti-immigration invective in the early stages of France’s presidential race. He is packing auditoriums with paying crowds and filling supporters’ heads with visions of a Trump-like leap from small screen to the presidential Elysee Palace when France votes in April.

Although not yet officially declared as a candidate, Zemmour has so far dictated the course and tenor of the campaign. With climbing poll numbers, now consistently in double digits, and a Trump-like knack for generating buzz – recent video of him pointing a sniper rifle at journalists is racking up millions of views – Zemmour is sucking airtime from declared contenders.

He has also destabilized them by hammering on about immigration and the mortal danger he says it poses to France, making it harder for mainstream rivals to steer campaign conversation back to themes – combating climate change, post-pandemic rebuilding and suchlike – they want to focus on.

Zemmour is acting as a presidential contender in all but name. Supporters are soliciting funds and the backing from elected officials that candidates need to run. Shown the rifle at a security show by an exhibitor who said, “When you are president, Mr. Zemmour,” he interjected, “Yes.”

That is a horrifying scenario for French Jews who are appalled by Zemmour’s sugarcoating of the Vichy regime that was led by World War I hero Marshal Philippe Petain. He was tried and sentenced to death at World War II’s end, subsequently commuted to life imprisonment.

That Zemmour is himself a descendant of Berber Jews from Algeria, a family history he talks about proudly, deepened the hurt for Jews who lost relatives to the Holocaust.

“Just because he is Jewish, he is doing something that nobody else can do, and that is just disgusting,” Weil told The Associated Press in an interview. “History is complicated but this is very simple: Petain did not protect the French Jews.”

The frightened men, women and children herded aboard convoy No. 63 swelled what, by World War II’s end, became a shameful count of 74,182 Jews deported from France. Most were sent to their deaths in Auschwitz, in Nazi Germany-occupied Poland, where more than 1.1 million people perished.

A Paris court in February acquitted Zemmour on a charge of contesting crimes against humanity – illegal in France – for arguing in a 2019 television debate that Petain saved France’s Jews from the Holocaust.

In its verdict, the court said the deportation of foreign and French Jews “was implemented with the active participation of the Vichy government, its officials, and its police.” Zemmour’s comments negated Petain’s role in the extermination, the court added.

But in acquitting Zemmour, it said he’d spoken in the heat of the moment. It also noted that during the trial, Zemmour made a distinction between saying that “some French Jews” were saved (using the word “des” in French), which he maintained was true, and saying “the French Jews” were saved (using the French word “les”), a generality which he said he disavowed.

Yet last month, Zemmour employed “les” when expounding again on Vichy in another broadcast interview, saying: “I say that Vichy protected the French Jews and that it handed over the foreign Jews.”

“It’s abominable, because these poor people died,” he added.

Lawyers who contest his court acquittal plan to cite that interview as evidence when their appeal is heard in January.

Politically, most threatened by Zemmour is French far-right leader Marine Le Pen. Since losing the 2017 presidential runoff to winner Emmanuel Macron, she has watered down some of her policy proposals in hopes of broadening her appeal. But Zemmour is chipping away at her base, seemingly poaching Le Pen voters who suspect she’s gone soft. Some polls suggest they are neck and neck. But both consistently trail Macron, who is expected to stand again.

While both portray immigration as a threat to French identity, Zemmour uses language that Le Pen balks at and which his critics say positions him at the extremes of the far right. In a country that officially regards itself as colorblind and where public discussion of race is sometimes frowned upon, Zemmour is rare among political figures in openly distinguishing between skin colors. At a recent rally in Versailles, he described woke culture as a plot to make “white, heterosexual, Catholic” men feel “so full of guilt” that they willingly abandon their “culture and civilization.”

On Vichy, Zemmour has sought of late to draw a line under that topic. “I am no longer discussing historical points that are discussed by historians,” he said in Versailles.

But for French Jews, the damage is already done. Some fear he has muddied decades of work by Holocaust researchers to indelibly document the horrors.

“He is denying something that was evident, that cannot be denied,” said Eugenie Cayet, 84, whose father was deported from Paris to Auschwitz and killed.

“What’s his goal? To rally all of Le Pen’s votes behind him.”

It’s work more and play less for Cannes Lions this year

Cannes Lions has a hangover. After years of hard partying, it’s finally trying to sober up. A tamer and tighter festival with a sharper focus on work, rather than just lavish Gatsby-esque parties and gatherings on five-star hotel terraces and beaches.

Last year, the festival organisers faced fiery criticism. One of the big four holding companies, Publicis, made a shock announcement that it won’t participate in the Oscars of advertising this year and instead redirect all resources to set up Marcel, its AI-powered collaboration platform.

In a rather bizarre move, Publicis chairman Arthur Sadoun will be on stage at Cannes Lions to show the entire global marketing community a demo of Marcel in action. The company is not officially participating but it hasn’t dissuaded its brand partners from submitting almost 400 entries for the awards and over 80 people including executive staff, from heading to the French Riviera.

Sadoun said in a statement that the “sacrifice” would be worth it and thanked the Lions for inviting the Groupe to present Marcel at this year’s festival. He continued, “It will be only for a couple of hours but we are really looking forward to having the opportunity, one year later, to share why we believe that the decision we took was right for our people, our clients and hopefully for our industry.”

But what’s truly got the marketing community buzzing is Sir Martin Sorrell taking the stage in a session with author Ken Auletta at the end of the week. Last year, among Cannes Lions’ loudest critics was Sorrell, the former CEO of the world’s biggest marketing communications company WPP, who said Cannes had “lost the plot”. Since that comment, Sorrell’s personal plot line has seen some dramatic twists. Three months ago, he left the company he built. A recent expose by The Financial Times claims Sorrell used company money at a high-end brothel in London’s Mayfair district. Also in the report are accusations of unprofessional and unfair treatment of his staff at WPP. Sorrell has firmly denied the allegations.

In light of recent events like #Me-Too and #TimesUp, and the fall of powerful men in the media and entertainment industries, the latest news coming out of WPP is a major blow to an industry already rife with gender inequality and sexism. A subject some believe the Lions have not adequately covered this year, what with a handful of sessions and fringe events addressing the issue. Among them a session with #MeToo founder Tarana Burke.

In a nut shell, if one thought the FIFA World Cup kicked off on an unpredictable and weird note, Cannes Lions 2018’s is already a lot weirder. The past year and the early part of 2018 also have been particularly tumultuous for the industry. Among the many disruptive, technology-led changes sweeping across the business, there’s the Facebook triggered data firestorm and its role in Donald Trump’s election campaign. Marketers’ no-nonsense approach to transparency and brand safety saw several big brands pulling out of YouTube.

That, however, didn’t affect Google’s nomination and win as the Creative Marketer of the Year this year. Consultancies like IBM and Accenture are no longer on the fringes, and are increasingly seen as a threat by traditional agencies. But Scott Goodson, founder of NYbased agency Strawberry Frog, a Cannes veteran and speaker this year sees the bright side. “Brand is important again! Women are having more influence in the top echelons of leadership (though there is still more to do). Martin Sorrell out means more women can move in. This is as much a technological revolution as a fight against the old cigarsmoking patriarchy, and finally for more inclusiveness and equality! About time, no?”

Indian drug companies seek cure for Donald Trump’s ‘Buy-American’ plan

Mumbai: Indian drug makers with a large presence in the US market have engaged legal and policy experts in the United States to study an executive order issued by President Donald Trump last week to prioritise made-in-America medicines.

“We have asked our experts in the US about what do they think of the order,” said an official from the pharma industry aware of the development. “It is better to go through it line by line… It is an important market for us and we need to take care of it.”

The presidential order issued on August 6 called for federal agencies involved in the procurement of essential medicines, medical countermeasures and critical inputs to prioritise purchase of such items from domestic manufacturers to reduce the country’s dependence on foreign manufacturers. It also urged these departments and agencies to identify vulnerabilities in the country’s supply chains for these products.

India and China together supply more than 70% of finished drugs and active pharma ingredients to the US. Indian companies supply 40% of the generic drugs that are used in the USA.

“We are still in the process of studying this order,” said Sudarshan Jain, secretary general of Indian Pharmaceutical Alliance, a lobby group of large Indian pharma companies.

Indian companies have manufacturing facilities in 15 different US states and have invested a total of $4.5 billion in the country, industry officials said.

“Every country is talking of creating their own supply chain; it is not practical,” said the industry official quoted first. “So, what we are saying is if there is going to be persified supply chain, then India as one of the important strategic alliances of the US can work together (with the US) to ensure affordable supply of API (active pharmaceutical ingredients) and key starting materials to maintain continuity of supply chain.” The person said Indian drug makers demonstrated their ability to do this during the Covid-19 crisis, “and we will continue to do this”.

Indian companies such as Zydus Cadila and IPCA labs have supplied several million doses of critical medicines used for Covid-19 treatment, including hydroxychloroquine tablets, to the US in the last few months. This despite India restricting HCQ export to other parts of the world.

Jeff Francer, interim CEO of Association for Accessible Medicines (AAM), a lobby group of generic drug companies in the US, said it may not be viable to move generic production to the US as prices of such medicines are very low. Without addressing the undervaluation of generic and biosimilar medicines in the US with sustainable market supply plans, the country simply cannot secure the domestic market and supply chain with scale and sustainability.

In Video: Will Trump’s ‘Make in America’ order for essential medicines hurt Indian pharma?

India’s pharmaceutical companies hope Biden will not push for ‘Made in America’ drugs

MUMBAI | NEW DELHI: India’s large generic drug makers that depend on the US for 60% of their exports revenues are hopeful that their growth opportunity in the world’s largest pharmaceuticals market will improve under a Joe Biden presidency, industry officials said.

The industry is closely watching what stance the president elect will take with regards to the generic drug industry, and hope that he would not pursue President Donald Trump‘s push for ‘made in America’ medicines.

“Obamacare (Affordable Care Act that aimed to provide affordable health insurance coverage for all US citizens) will be back in focus, which will further improve the growth opportunity for Indian pharmaceutical industry,” Dinesh Dua, chairman Pharmaceutical Export Promotion Council told ET.

Another representative of an Indian pharma lobby group said these are early days and any impact of the new administration on the industry will be seen only after January 2021.

While Trump’s stand on making drugs cheaper for Americans supported the generic industry, his rhetoric regarding passing an executive order for making drugs locally had put the Indian generic industry in a flux.

The outgoing president had in August issued an executive order, telling federal agencies involved in the procurement of essential medicines, medical countermeasures and critical inputs to “prioritise purchase of such items from domestic manufacturers to reduce the country’s dependence on foreign manufacturers”. It also urged these departments and agencies to identify vulnerabilities in the country’s supply chains for these products.

Bioreactor bags are SII’s critical input under export ban

Under the Defense Production Act, invoked by former US President Donald Trump, several critical supplies of Covid-19 therapeutics including vaccines face export bans.

Among them are giant plastic bags called bioreactor bags needed to manufacture and process vaccines. These are made by a handful of companies — US firms ABEC and GE Healthcare and Germany’s Thermofisher.

The bags made in the US have now been cornered by US-based vaccine makers Pfizer, Moderna, and J&J.

The bioreactor bags are used to grow cells needed to manufacture vaccine doses. This is a complex biological process and these bags maintain a high quality sterilised environment.

Serum Institute has been importing these bags from the US and Europe. Adar Poonawalla and SII have appealed to the US to lift the ban on this critical input.

( Originally published on Apr 17, 2021 )

Three local cos working on antibody drugs for Covid

Mumbai: Indian drug makers have started working on antibody drugs to cure Covid-19, a class of medicines that US president Donald Trump hailed as a “miracle” treatment. At least three Indian companies are in various stages of developing these drugs, which will deliver antibodies to an infected person to help them fight the disease, which is said to have originated in China 10 months ago and has killed over 1 million people globally, one-tenth of them in India.

Bharat Serums, Intas Pharma and Biological E along with ICMR are working on antibody therapies for Covid-19 in India.

Antibodies are the first line of defence that the body unleashes in response to a pathogen. The drugs that are currently used to treat Covid-19 can only reduce the viral count in a patient. Antibodies are similar to vaccines, not only acting as an antiviral but also providing at least short-term immunity against the disease.

Ahmedabad-based Intas plans to use antibodies from the blood of patients who have recovered from Covid-19 to develop its drug that it says can be given to patients of all blood groups.

Intas will provide purified and enriched preparations of Covid-19 neutralising antibodies in high concentration, free from blood-transmitted viruses and other plasma proteins, VP Suma Ray told ET in August. The company started trials for moderate Covid patients using this mechanism and the study results are awaited.

Mumbai-based Bharat Serums is using antisera from horses to generate antibodies, a method used in manufacturing rabies and diphtheria vaccines. “The equine antibody is a tried and tested route and is polyclonal, which makes its efficacy better than monoclonal antibody drugs,” Sanjeev Navangul, CEO of Bharat Serum, told ET. The company expects its trial results by next month.

Polyclonal antibodies are made from different immune cells, while monoclonal antibodies are clones of a specific parent cell.

Equine serum is considered viable as antibodies in horses can be raised in a short period with proof of concept within four months

India may not feel the heat of US steel tariff

KOLKATA: US president Donald Trump’s decision to impose a 25% tariff on steel imports is a concern but will have a bigger impact on China and Europe than on India, the government said. The surprise move may not have any immediate adverse fallout but is likely to pose some problems in the long run for Indian steel companies that have been focusing on exports to expand their market base and beat sluggish demand at home.

While the short to medium-term impact of the US decision will be limited, the tariffs are likely to stay for an “unlimited period,” which, experts say, is more worrying in the long term.

“Two percent of our (steel) exports is to the US, so the dent may not be as big on us as it will be to China or the European Union. But the logic to put tariff under 232 is weird and hence our concerns,” steel secretary Aruna Sharma told ET. Citing steel imports as a threat to national security and “using that logic for tariff is stretching the issue of security. The anti-dumping duties applicable in India are WTO compliant and prevent dumping but do not curtail steel imports as international business.” She said India’s exports to other countries will go up as a fallout of this move.

Section 232(b) of the Trade Expansion Act of 1962, allows the US to investigate if certain imports, or high levels of certain imports, pose a threat to national security.

Exports up 40% till January
It is not clear whether the tariffs would include all imports or target certain countries only. Though the US accounts for only a small portion of total exports, Indian steelmakers have begun to carve out a small but significant market for themselves in certain high-value and critical segments such as pipes and tubes used in oil and gas applications.

“With the steel ministry targeting a sustained export growth of around 6-7% of steel production, the impact will mainly be felt in the long term,” said a metals analyst who didn’t want to be named.

India’s steel exports grew 53% in April-December 2017 to 7.6 million tonnes (mt) from 4.6 mt in the year-earlier period, largely due to the impact of protective measures taken by the government and the global trend of rising prices since June 2017. In the April 2017-January 2018 period, exports rose 40% to 8.2 mt from the year earlier, according to provisional figures from the steel ministry’s Joint Plant Committee.

“India’s export is minimal now since anti-dumping and countervailing duties are in place. We have to study what comes in the final orer,” Jayant Acharya, JSW Steel’s director (commercial & marketing), said.

Commenting on the Trump administration’s move, Moody’s Investors Service said the plan to impose tariffs on steel imports may be credit negative for Asian steel producers but the impact will not prove material.

“The impact of the tariff would be manageable for the Asian steel sector and Moody’s-rated steelmakers in the region because exports to the US account for relatively small portions of their total steel production,” Moody’s analyst Sean Hwang said.

US steel tariff impact: India may face dumping in the long run

US president Donald Trump announced last week that the US would impose heavy tariffs on imported steel and aluminum, but indicated that some countries such as Canada, Mexico and Australia would be exempted. Key US trading partners, including the EU, have warned the tariffs could backfire, provoking a trade war and hurting allies more than China, the main target of US tariffs.

India ranks 10th among countries exporting steel to the US, with volumes rising 16% between 2011 and 2017 on an annualised basis. US accounts for just 2% of India’s total steel exports and 6% of total aluminium exports.

Although the short-to-medium term impact on the Indian steel industry will be minimum, the country could witness dumping by US-hit exporters such Korea and Russia as they hunt for other markets.

Secondly, the potential persion of almost 6.4 million tonnes of steel and 3.7 million tonnes of aluminium to the global market will drive down prices, affecting domestic realisation of homegrown producers.

(Content input: Vatsala Gaur)