b'10American Journal ofTransportation ajot.comDecoupling: Where Is US-China trade headed?ForadecadetheUShasattemptedtodecou-ple from China, using tariffs as the latest tool to accomplishthegoal.Isdecouplingworking?Is it even possible? And is this approach helping or hurting US businesses?By Pete Goldin, AJOTt AriFFb ArrierS .ChinawithaChina+1or TariffshaveeffectivelyChina+2strategythechal-becometheprimarymecha- lengeisthatsometimestariffs nism through which decouplingare higher on those other coun-policiesareimplemented,tries than they are on China.explains Jackson Wood, Direc- Gold elaborates on how dif-tor of Industry Strategy, Globalficult it is to find new suppliers Trade Intelligence for Descartes.in other countries, saying its not There have certainly been otherlike opening up a phone book. It policymeasuressuchasthetakes time to make sure the com-CHIPS Actandvariousindus- pany is who they say they are.Antonio Costa, the President of the European Council; Narendra Modi, Prime Minister of India; trial incentives but in terms ofCan they manufacture the prod- Ursula von der Leyen, the President of the European Commissionwhat shows up most clearly inuct to your specifications? Can tradedata,tariffchangesandthey pass all the different safetyA study in contrast: India-EU tariff uncertainty tend to be theregulations, especially for chil-most immediate and measurabledrens products? Do they have driversofvolatility.Fromourtheskilledworkforcetomakeand India-US trade deals perspective, overall tariff policythe products? Do they have the and the uncertainty surroundinginfrastructure? All those factors it have been front and center ingo into the decision-making. India moved Fast after US 50% tariff shock treatment.influencing trade patterns. One of the reasons for the This has clearly had a det- tariffs is bringing back US man-rimentalimpactonUS-Chinaufacturing, Gold stresses. ButBy Manik Mehta, AJOT tradeflows,saysDavinChor,we cant make everything here. MichaelG.Fisch1983Profes- Weve seen declines in US man- After President Donald Trumps 2025 shockIndias tariff reductions on imported cars will need sorandGlobalizationChairatufacturing. There are industriesannouncementof50%tariffsonIndianimportssome time to benefit European carmakers. theTuckSchoolofBusiness,that havent been manufacturing-thisincludeda25%punitivetariffonIndiasi ndiAt urnS tOeu?DartmouthCollege.Sincetheproducts in the US in decades. RussianoilpurchasesIndianpoliticiansand LiberationDayannouncementsHe adds, I dont think Chi- bureaucrats are now cautiously reacting to TrumpsAlthough the US administrations reduction of on April 2, 2025, sparked off anas ever going to be fully out ofturnaroundannouncementthattheUSwouldtariffs from 50% to 18% would give some relief boutoftariffrateuncertainty,the picture. Its just not feasible.impose a total of 18% tariff on Indian imports. Theto Indian exporters, Dutch bank ING sees Indian we have seen US direct importsUS companies are looking else- 25% punitive tariff was withdrawn, Trump said,exporters will turn away from the US to the EU, from China drop back to aroundwhere, at Southeast Asia, India,because India had stopped its Russian purchases.since Indias goods exported to both the EU and 9% of total US imports. This isand the Western Hemisphere. ButIndia has not yet confirmed this.the US are similar. essentiallywhereChinassharewe need to realize that theres noThe Indian bureaucracy, which can take years toThe EU-India deal, which had been languish-inUSimportsstoodin2001new China. Theres nobody whofinalize an agreement with a foreign country, acteding in the past 20 years after the slow pace of nego-whenChinajoinedtheWTO.cantakeupthecapacitythatswiftly after Trumps 50% tariff announcement lasttiations, seemed to have received a strong impetus The latest rounds of tariffs andChina currently has. year, and began picking up the threads of uncom- to move forward, with some experts saying that tariff uncertainty have essentiallypleted agreements with other nations.It finalizedTrumps tariff jolts accelerated the pace towards undone two and a half decades ofw HAt tHen uMberSS Ay free trade agreements with individual nations andfinalization of the EU-India deal. US-China trade integration. ChinaimportstotheUStrade blocs, including the European Union.The services commitments will give EU com-havedeclined,butitisproba- paniesaccesstoIndiasfinancialandmaritime uS b uSineSSeSH urt bly too early to tell if this willH Ow tHei ndiA -eu FtA t rAnSlAteS services markets, among others, while India will TariffsonChinaarealsobe a long-term result driven byTheEU-Indiawillformtheworldslargestget access to 144 services subsectors, including hurting US businesses accordingdecoupling and tariffs. free trade zone, with a combined two billion con- information technology and professional services, to Jonathan Gold, VP of SupplyOverthepastyear,Chi- sumer population and accounting for 25% of theas well as improved access for its professionals to ChainandCustomsPolicyatna-origin container import vol- global GDP.Duties on most EU and Indian goodsthe EU. theNationalRetailFederationumeshavegenerallyfollowedwill be slashed, opening opportunities and generat- While Indias Commerce and Industry Minis-(NRF). The tariffs are having arecognizableseasonalpatterns,ing faster trade flow in both directions.ter Piyush Goyal envisaged the agreement to come significant impact on US retailersstrengthening in late spring andThe annual EU-India two-way goods and ser- into force later this year, experts point out that the and importers, says Gold. Theearly summer and softening intovices trade exceeds Euro 180 billion, supportingdeal still needs to be ratified by EU member states tariffuncertaintyhasbeenthethe fall and winter, which is con- some 800,000 jobs in the EU, while the EU alsoand the European Parliament.That could go much biggest challenge for many com- sistentwithhistoricalshippingsustainedemploymentinIndiasexport-orientedbeyond this year. panieswhoareplanningtheircycles,explainsWoodfrommanufacturingandservicessectors,whichhave supplychainssix,nine,twelveDescartes. However, comparedparticularly been hit by the US tariffs.India has,i ndiA -uS A greeMent w HOb linkedF irSt ? months in advance. Not knowingto the same months a year ear- generally, maintained a healthy trade surplus withTheTrumpadministration,whichwatched whats going to happen with thelier, several months in late 2025the EU which is seen as an important and diversi- Indias moves as it finalized trade agreements with tariffs or trade policy in generalshowed year-over-year declines,fied economic partner for the former.the UK, Oman, and the EFTA region (Switzerland, has been extremely difficult.suggestingsomeunderlyingUrsulavonderLeyen,thePresidentoftheNorway, Iceland and Liechtenstein) in 2025, had Gold continues, Last yearsoftness beyond normal season- EuropeanCommission,whowasinIndiawithhoped that India would acquiesce in US demands, whenChinatariffsjumpedupality. That said, the overall pat- AntonioCosta,thePresidentoftheEuropeanand finalize the deal.A year had already passed as to 145% that had a significanttern still reflects typical seasonalCouncil, for the agreements formalization, calledthe chill set in bilateral relations following Trumps impactoncompanies. Wesawfluctuations rather than a contin- the FTA the mother of all deals, highlighting its50% tariff imposition.Some Indian experts believe companies front loading last yearuous downward trend. unmatched parameters, market access depth, andthat the presence of EU Council President Costa to try and avoid the tariffs, butWoodaddsthatChina-or- the perfect economic weight of both sides. andEUCommissionPresidentvonderLeyen smaller businesses are the onesigincontainerimportvolumesIndiawillreducetariffson96.6%ofEUas state guests at Indias high-profiled Republic being hurt the most because theyinto the US have fluctuated yearimports while the EU will reduce duties on 99.5%Day parade on January 26 followed by the formal dont have the ability to mitigateto year rather than following aof Indian goods.announcement of the EU-India agreement the next the impact of the tariffstheystraight-line decline. After peak- Indiaslabor-intensiveexportsectorstandsday, may have moved Washington.have to pay them and then theying in 2021, volumes moderatedto benefit immensely, with zero-duty access forThe US administration, already facing criti-arepotentiallyforcedtopassin2022and2023,reboundedtextiles, apparel, leather, footwear, gems and jew- cism from Democrats and several think tanks for them along to their customers. in 2024, and softened again inelry; agricultural and processed food exports willshabbilytreatingareliableandtrustedstrategic WithoutChina,USretail- 2025. While levels remain belowalso benefit.partner,besideslosingahugemarket,showed ers and manufacturers must findthe2021high,theyarestillEuropean industries, on the other hand, willsome flexibility after the EU-India agreement. newsuppliers,andthisisnotabove the annual averages seenbenefit from increased access to the worlds fast- The US would not only do away with the 25% so simple. Retailers have longin 2023, indicating variability inest-growingmarket.Europeancarmakers,forpunitive tariffs but also reduce the reciprocal tar-been looking for alternate sourc- sourcingpatternsratherthanainstance, welcomed Indias tariff reduction fromiffs from 25% to 18%.India, according to Trump, ing, Gold explains. The chal- consistent downward trend. 110% to 10% over five decades, fixing an annualwould stop buying Russian oil and, instead, buy lenge for many retailers is thatWhile recent container importquota of 250,000 EU vehicles with reduced tariff.oil from the US and Venezuela. India would also ittakestimetodiversifyyourfiguresreflectvariabilityandTrade experts believe that the gigantic foot- enforce zero tariffs on US agricultural imports. supply chain. Its not somethingsomeyear-over-yearsoftness,print of Japanese brands such as Suzuki, Hyun- Indias Ministry of External Affairs has so far not that can be done overnight. Andtrade volumes are influenced bydai, etc., which dominate the Indian market with acommented on Trumps assertions. whilemanycompanieshave(DECOUPLINGcontinuedcombined 50% market share, will limit the impactThese and other questions need clarification been looking to diversify fromon page 17) of the preferential tariffs on European car imports.(CONTRASTcontinued on page 17)'