The trade war has reached its peak after US President Donald Trump decided to impose 145 percent tariffs on Chinese products. China has also raised tariffs on American products to 125 percent. Trump has suspended tariffs imposed on countries other than China for 90 days.

What will be the impact of the trade war between two major economic powers on a country like Nepal? Can Nepal get any benefit from this situation or will it suffer a loss? Economist and former member of the National Planning Commission, Poshraj Pandey Yagya Banjade of Kantipur and Raju Chowdhury :

US President Donald Trump imposed high customs duties on 185 main partner countries including Nepal. It has been suspended for 90 days for countries other than China. How do these activities affect international trade and the global economy?

Trump's current activities will have to come back after a few years to analyze. US policymakers have long felt that liberalization in world trade (globalization) is benefiting countries including China more than themselves. After Trump first became president in 2016, he did not send any members to the World Trade Organization's (WTO) Dispute Settlement Body. Increase the tariff to China. This decision of Trump was also continued by Biden, who became the president after him. Going one step ahead of Trump, Biden introduced a policy to block information technology trade with China. US policy makers and economists have also been mentioning in various articles and papers that they have failed to take full advantage of globalization and liberalism in the world market. They have been insisting that the current system of globalization should be restructured. That's why Trump is doing what he's doing now. It's not a one time thing. The past has come as a preparation for a long time. 

Immediately after taking office for the second term, Trump canceled the grant through the United States Assistance Agency (USAID). It then imposed higher customs duties on key trading partners. The main purpose of this policy is to ensure that the currency of countries including China is not stronger than the US dollar, that they can borrow from the world market at a low interest rate, and that more and more manufacturing industries come to America. To accomplish these objectives, the tool used by the United States is a high tariff (reciprocal tariff). However, this tool is irrelevant, controversial and contrary to the principles of economics. Raising tariffs increases prices in the US. They believe that inflation can be controlled as the US dollar becomes stronger. However, the strengthening of the dollar is not enough to increase the manufacturing industry. It is therefore controversial. It seems that America is trying to increase the revenue, increase the productive industry, obtain cheap loans, and control the price increase through a single policy (tariff). Which doesn't seem possible. 

The interest hidden in the latest policy is that the countries under the European Union spend less on defense, it should be increased. After increasing the defense budget, they had to purchase materials for the arms endowment. Those materials should be purchased from America. This is also America's hidden interest.  Why did Trump have to postpone the decision within a few days of announcing the

? 

There are three reasons for this. First, China raised retaliatory tariffs, the European Union also decided to retaliate against the US. Second, the $38 billion sell-off of US Treasury bills and bonds, previously considered the safest, in one day eroded credibility of the government. Third, if trade competition with China is to be achieved, the support of regional countries and association organizations including the European Union is needed, which is not immediately apparent. For these reasons, Trump seems to have suspended the tariff of countries except China for 90 days.

America not only imports but also exports. How will the decision to increase customs duty affect him?

This decision seems to affect America as well. Currently, the United States has only about 20 percent of world trade. The remaining 80 percent belongs to other countries including China. Now, if those nations unite and take a strategy to isolate America, it may be difficult for him. And, the current multilateral structure is crumbling and the situation does not seem to go that far. Analyzing world trade, the US has a deficit in goods trade only, but a surplus in services. Even now, because of globalization, America has maintained a lot of dominance in the world market and it is also taking a lot of benefits from it. Now, all the international trade that we do is the dollar. Therefore, this decision does not benefit America. 

Since Trump was first president, the trade war between the US and China has been raging. Now it has reached its climax. What is the sign of the world's two largest economies clashing like this? 

America's objective is to stop China. Reduce the US trade deficit. Lobbying has started from various countries in the case of customs duty. It seems that after 90 days the US will remove the tariffs under some pretext. The policy of increasing tariffs will not benefit the US. 

Both are large economies. China accounts for more than 70 percent of some regional trade, including vehicles and information technology. In such a situation, trying to isolate China from world trade is likely to lead to a recession in the world market. After the decrease in world trade, the growth rate of the world economy is likely to be affected. When the trade war between the US and China escalates, the current structure in world trade will collapse and the supply system will be disrupted as it will take a long time to build a new structure. Because now many countries including America are importing 'manufacturing goods' from China. Isolation of China may have an impact on the economy of other countries as well as the US. This may lead to anti-globalization activities (deglobalization) for a few years.  There is nothing predictable or believable in the

world. It was seen that the country can adopt any policy at any time. Against the liberalism started by Ronald Reagan in America, the president has taken such steps. Open market economy, neoliberalism, globalization, WTO etc. What will happen now?

It's true. When a powerful country like the United States takes such steps, there is an unimaginable problem. With the current globalization, various forums were available for negotiations and discussions for small countries like Nepal in terms of trade or economy. Those forums may no longer be available. Every country may have to lobby bilaterally rather than multilaterally. Small and weak countries are always at the bottom in bilateral negotiations. There is a risk of dominance by big and strong nations. But it does not seem that America's aim is to destroy the very structure of globalization. He is trying to advance globalization according to his interests. The US has been pressuring NATO members to increase security. As soon as security is increased, foreign subsidies should be reduced and the budget of the security sector should be increased. 

Due to the impact of globalization structures including WTO, have the protection and facilities policies of small and less developed countries like Nepal been affected?  The

is not just about trade, the US has also eliminated subsidies. It affects small countries more. USAID was a strong means by which America increased its power in the world market through soft means. Removing the subsidy seems to reduce that power. Talking about Nepal, current revenue is difficult to cover current expenses. Hence a subsidy or concessional loan is required. Support is also necessary for other developed countries. So far, America has been helping a lot. Many programs have been affected by the sudden stoppage of support. Now we do not have the necessary budget to continue those programs. It has created a 'vacuum'. That vacuum will be filled by nations with resources and capabilities. Which is not immediately possible. 

However, if the 'vacuum' created by the US's decision to stop aid in various countries, especially China, begins to fill, geopolitical (geopolitical) tension may begin. After that, small countries are under geopolitical tension. 

For example, when there was an earthquake in Myanmar, the US sent only 3 people to study. It issued a statement saying that there are other rich countries to observe how much damage has been done. Such activities seem to reduce the dominance of America in the world market. If China also enters into it, small countries like us will be under geopolitical tension. 

Trump's decision to increase tariffs is likely to decrease confidence in the government there. China's goods will also be imported by America. How do you see the immediate impact on the US economy and employment?

America imports from China is 650 billion. The US economy is a trillion dollar economy. But it seems to be affected in certain areas. It affects the rights of consumers of digital technology, it is expensive. Solar panels, house holds, etc. are expensive. It is estimated to cost 4 thousand dollars per family. Vehicles are likely to cost up to $10,000 per family. 

China, European Union and Canada protested against the steps taken by the US. What is the reason for India to remain silent when Mexico, Brazil and other countries are saying that they will retaliate?

India has been calling itself the leader of the global south and presenting itself as such. Vietnam, Cambodia are the Global South, the US imposes more taxes there. If India does not say anything, it seems that India's interests are hidden more than the interests of the Global South. India has imposed only 27 percent customs duty. India's competitors are China, Vietnam etc. India feels that it will be easier to compete now that it is smaller. India has also initiated talks with the US. India does not seem to object that it is addressed under their bilateral trade. But at this time, India has to give the appearance of a Global South leader. India has failed here. 

Since becoming a presidential candidate for the second time, Trump has been saying 'America First'. After being elected, they are implementing the election announcement. The impact of these policies seems to be immediate in America. However, the American people do not seem to have much opposition to the policies he has taken. How do you see it?

All economists have opposed it. People involved in the stock market have protested. Many of those who are the basis of Trump's ballot are not even educated. Those who do not have a higher education believe that what Trump is talking about is correct. He thinks it's right. That's why there doesn't seem to be much opposition now. But judging by the reactions of others, the Republican vote is likely to affect the bank. Canada has done the same. China has also imposed many customs duties on chicken meat and agricultural products. It affects the US Midwest region. However, since the decision was made recently, its impact has not reached there yet. Since they have not been affected, there is no opposition from citizens. 

After raising the customs rate, everyone's goods, including China, have become more expensive. Customs duty is an indirect tax. The impact will be on the consumer. But the US understands that all exporters pay.

They have been saying that if the US increases the customs duty, China will also increase it and the EU will also face it. What will be the situation of job loss in the world market, increase in prices, and shrinking of the economy?  No one wins in a

trade war. Both sides are losers. Inflation in the US will increase by at least 9/10%. As prices rise, the purchasing power of the American citizen naturally decreases. Let's talk about Nepal, ready-made garments are exported from Nepal to America. If you have money, you will wear clothes. If food is not enough, why buy new clothes? Similarly, carpets are exported. Carpets are laid only if there is money, if there is no money then carpets are not bought.

Pashmina, Churpi etc. are exported. If they don't have money, they don't keep dogs. This means that if the purchasing power of the US citizen decreases, the exporting countries will also be affected. This could mean a global recession.

Trump has given 90 days time for negotiations on customs duties. More than 50 nations are trying to talk. What can be done on behalf of Nepal? What can our role be?

What will Nepal negotiate for? Nepal's policy makers, private sector, academics are worthless. Nepal has got duty-free facility on 77 items. But it is only about 3 percent of total exports. 

Facilitated by bringing a separate law for 77 items and passing the law in the parliament. It must be proved that the WTO is necessary. Prepares a document and presents it to the WTO every year. We have exported less than 3 percent of the total exports under the facilities given in that way. We talk about duty free, quota free, that will go through GSP. Goods exported through GSP are about 9 percent. We have been exporting a total of 88 percent to America through other countries. We did not understand the American market and increase the production capacity accordingly. Trade should be facilitated by increasing productivity. But that didn't happen. 

Until yesterday, we have been saying that we are cheaper than India, China, Bangladesh and other countries. Before this, 77 items had duty-free (zero customs) facility. But why we could not export?

This is how we have structured our economy. If someone has 5 crores, they can buy land and live there and double their income in 2 years. After investing in shares, the income is almost doubled in 2 years. Apart from that, import and sell goods. The risk of importing is very low, in 5/6 months you will get profit by selling the goods. But when it comes to production, manufacturing is much more complicated. Land had to be bought, factory construction, workers etc., etc. It takes 2/4 years to establish. It takes another 2/4 years to recover the cost. Instead of going through all these hassles, import business became easier. All the old industrial houses have been converted into commercial houses.

When the market is headed for failure, the state will intervene. A common example, can the same interest rate be applied to those who import and sell goods and operate domestic industries? That didn't happen. Some concessions should be given to manufacturing industries. The problem is caused by the state's neglect. That is why it could not be exported.

Trade war will increase or end, what is the probability of goods being 'dumped' in Nepal?

There is a high possibility that goods from third countries will be 'dumped' in Nepal. Talking about China, it has exported to a high capacity. It will also have to sell to China to sustain the domestic economy. When selling, the price can be reduced or it can be sold without profit. When that happens, there is a high possibility of 'dumping' in Nepal. When that happens, some of the remaining industries in Nepal will also disappear. A separate 'war room' is needed to promote business. What is the condition of the item? Market, production, export situation, which are the competing countries? What policy is there? Which one to 'protect', which one to leave? That's how it goes. We have not paid attention to this. It would have been possible to arrange land for industry. But we couldn't.

Do you see the government of Nepal serious about "dumping" and taking profit?

Government ministers, employees have come to work. They get jobs, they go. I don't see the government being sensitive. Since 2002/2003, I have been speaking on the issues of promoting agricultural products, increasing production and increasing exports. Sometimes they bring it to the budget, but the law does not come. The trade agreement with India also has 'duty free' for agricultural products. Customs cannot be levied. In that agreement, there is no trade agreement with other countries. We have been insisting that it should be abolished. The exchange rate with India does not allow us to compete, we have been saying for 10/12 years to review it. Let's say that the government did not listen or did not show the courage to review. The World Bank has released a report that has reduced competition by 10 percent in exports. But the government has not paid attention to it. Apart from these, we have also failed in coordination. The Ministry of Commerce, Department of Industry is said to provide a facility. The Ministry of Finance will remove it. The facility is provided in the Industrial Business Promotion Act, but it is repealed by the Budget Finance Act. Nepal mainly produces agricultural products, there are also issues of quality. But even that is not coordinated. That is why we have failed.

So far we have not been able to take advantage of the opportunity. In the new situation created now, is there a possibility that investors from China, Bangladesh, India and other countries can come and invest in Nepal or not? The

investment turned out to be unexpected. There is more political risk than investment. Because of that, I don't think it will come to invest in Nepal until there is stability in America's policy. 2/3 years are wait and see. If they feel stable, they can come to invest in things that have facilities. But it doesn't seem like it will come soon. Looking at the data of Nepal, consumption does not seem to be according to production capacity. Production is only 50 percent. In this situation, it is better for domestic investors to wait and see.

9 items exported to India have been recognized by the Indian lab, will it bring some improvement in trade with India?

Controversy over lab testing would have delayed exports, costing lab testing in India. India helps a lot in exports after recognition. This is a long way forward. The matter was also from the past. This was in the 2009 agreement. It was possible to follow it up within 2/3 years. Not so sensitive. The government, ministers and secretaries keep changing and the problem has arisen.

We have been losing business since the past. The deficit is increasing every year. We have not been able to increase production, we have not been able to increase exports. What should be done to improve it?

Business' biggest enemy is remittances? 

When there is remittance, the government's soft policy becomes. That means remittances have come, demand has increased. No supply. Imports increased. Revenue came to the government after importation. The Ministry of Finance has also been rumored to have increased revenue. A monetary policy to promote exports would have been easier. Remittances increase the value of non-tradables. As soon as that happens, inflation increases, costs go up. We cannot compete. It is more beneficial to produce for the domestic market than to produce for the export market. As a result, domestic market oriented production has taken place. There is also no skilled manpower for the third party, product service business. There is a shortage of skilled and semi-skilled workers. That is why remittances are the biggest enemy of business. If there were no remittances, Nepal's exports would not be enough to buy petrol and medicines. At that time, there was a way to increase exports by making tough decisions. Sure now. Money has come from remittances. Nothing to do, nothing to think about.