Import Surge and Dumping Concerns amid Trade War and India–US Trade Deal

The United States-initiated trade war has evolved, with the United States now imposing baseline tariffs on most countries and escalating tensions with China. Using a global CGE model, we find that while the United States–China tariff escalation could benefit India through higher domestic demand, India could secure even greater gains by cutting tariffs more deeply. A uniform 25% tariff cut across all partners would boost India’s economy by 2.62%, double the gain of a no-action scenario (1.31%). Although an India–United States FTA could further accelerate growth, it also risks increasing Chinese imports by 14%, raising concerns over dumping—an issue already prevalent in India, where Chinese firms dominate dumping cases. To counter this, we recommend unilateral tariff liberalisation by India for all partners except China. This approach has minimal impact on India’s welfare, but it significantly reduces imports from China, thereby lowering dumping risks. Importantly, key macroeconomic indicators such as GDP, sectoral output, aggregate exports and domestic demand remain stable under this policy, ensuring economic resilience while addressing probable dumping threats effectively.