For the past decade, the one term that has captured the imagination of the entire American commentariat is the “China Shock”. The concept can be traced back to a set of academic papers published by labour economists David Autor, David Dorn, and Gordon Hanson, who showed that US districts that faced intense import competition from Chinese firms ended up with a decline in lifetime incomes, increased unemployment for a decade, and an overall deterioration in quality of life. The “China Shock” is a rare academic finding that not only highlights the scale of the negative impact of China’s trading strategies on the US, but also explains President Donald Trump’s political instincts to stick to the trade agenda across his two terms. Over the past week, India seems to have experienced a mini–America Shock of sorts. Trump’s decision to levy 50 per cent tariffs on India and roll back some of the diplomatic concessions given to New Delhi — such as importing, processing, and exporting Russian oil — epitomises the end of the American age of benevolence from an Indian perspective. While on the face of it, the China Shock and the America Shock have literally nothing to do with each other, they are tied by two common threads.
India’s trade dilemma with the US and China (Srijan Shukla – Observer Research Foundation)
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