Government of India delayed implementation of higher tariffs against some of the agricultural goods from the United States and now the increased tariffs will go into force on September 18 instead of August 4, 2018. While on one hand trade welcomes this extension on another they have requested government to revoke this ambiguity for continued smooth flow of businesses.
A 45 day delay in implementation date gave industry first sigh of relief and that they will not have to pass on the burden of increased prices to the end consumers but, a rise in uncertainty about future tariff rates impacts firm decisions to enter into and exit from the markets. There is the cost of the tariffs, but there’s also an administrative cost to try to understand the permutation and combinations as, there are several things that can go wrong while trying to deal with these issues. While the two biggest democracies sit and decide on how they want to handle their trade relationships supply chain and compliance issues are at risk and it is for the businesses to deal with. The International Monetary Fund has warned that a trade war could undermine the strongest global upswing in seven years. IMF spokesman Gerry Rice said, “Everybody loses in a protracted trade war,”
Possibility of implementation of increased tariffs on a new given date and the threat of a global trade war is something that all company executives are taking into consideration while planning for their future procurement decisions. Due to lack of domestic supply it is critical to import these agricultural goods from various countries including United States and it is not possible to develop new suppliers overnight. Festive season is round the corner and all purchase decisions are in limbo obviously few orders will be made and executed but, those decisions will be taken on the conservative side and the Indian stakeholders will not be able to negotiate prices with the global suppliers.
Further trade pundits believe that definitely the supply chains are affected and it will impact even those who are not directly an importer but, anywhere in the entire chain. These supply chains are deep and the odds are that somewhere downstream, or upstream, if an endproduct has almonds or walnuts in it then it is going to be affected. Businesses those are not even responsible for this arena of confusion will have to compensate the price of being in industry. Financial executives are being heard stating that it’s very difficult to be completely predictive but, no one can factor in such long term ambiguity.
Forum of Food Importers said, “With all the threats of tariffs bouncing back and forth across oceans, health food items are bearing the brunt of the bluster. As it stands, it’s uncertain whether any of the threatened retaliatory tariffs on goods coming from United States into India could become reality. If you add that kind of increase, you’d be looking at consumers replacing a substantial number of those healthy food items from their diet and also, imagine plight of an importer whose shipment is on water and he is not sure if it will reach Indian waters on September 18 or after that.”
Forum was also noted saying, “We need to have an environment of stable trade and we urge both the countries to understand the power of stable and firm long term trade relationships. This volatility will not take us long way and as said by many no one wins a trade war.”