Strengthen your base, Pg12.

Key Highlights:

• The US, EU, and China are disrupting global trade by using market access, environmental rules, and supply chain dominance as leverage.
• US tariffs on specific countries have decreased India's exports to the US by 37% since May.
• The EU's Carbon Border Adjustment Mechanism (CBAM) has already caused a 24% drop in India's steel and aluminum exports to Europe in FY2025.
• China dominates manufacturing in sectors like electronics, autos, and solar panels, threatening industries worldwide.
• China requires export approvals for rare earths, leading to retaliatory tariffs from the US.

Detailed Insights:

• The US is pressuring allies to buy US energy, penalizing India for purchasing cheaper Russian crude, potentially destabilizing energy markets.
• The EU's CBAM and Deforestation Regulation (EUDR) are seen as import tax collection tools that could significantly impact India's exports.
• China's manufacturing dominance, supported by subsidies, is flooding global markets and displacing industries in other countries.
• India's strategy should focus on strengthening domestic manufacturing, safeguarding strategic autonomy, and securing supply chains.
• India needs anchor investments in electronics, defense, and green technology to build global supply chains and enhance manufacturing competitiveness.
• High production costs in India, up to 25% higher than in China, need to be addressed to avoid widening the trade deficit.

Key Concepts Involved:

• Carbon Border Adjustment Mechanism (CBAM): An EU mechanism that taxes imports based on their carbon footprint.
• Deforestation Regulation (EUDR): An EU regulation restricting imports from land deforested after 2020.
• VUCA World: Volatile, Uncertain, Complex, and Ambiguous environment.