InvestorQ : when trump raise import tax on china goods why effect on nifty index is a any strong reason.
shaik aarif made post

when trump raise import tax on china goods why effect on nifty index is a any strong reason.

Answer
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1 year ago


Since last year, Donald Trump has imposed import duties on goods imported from China. You may wonder what it has to do with the Nifty index but there is a strong reason why the Indian Nifty is not too pleased with these tariffs. Here are the reasons.
Higher tariffs mean it increases costs for American importers and it reduces business for Chinese exporters. This has led to GDP slowdown in growth in the US and in China. Since the US and China are two of India’s largest trading partners, it impacts India’s exports and it is visible that it is down by 9.7% in June 2019 due to trade war impact.

The second reason is a little more serious and that is something you need to keep in mind. When the US imposes tariffs on Chinese goods, what is the choice that China has? It can weaken the currency, Yuan, so that products become cheaper and the American buyers do not feel the pinch of higher tariffs. The only problem is that if China devalues its Yuan then countries like India will also have to devalue the rupee to stay competitive. That can impact capital flows.

When tariffs are put on Chinese imports, it is a signal that it will happen in other countries also. We have seen that impact on India too. Eventually, it leads to trade war from which nobody benefits.