While the trade war between the US and China is escalating, protectionism has been rising across the world since the 2008 global financial crisis. Taking the lead are the G20 countries, which together account for 84% of world GDP and 79% of world trade. India, too, ranks high on protectionism. The number of anti-dumping initiations increased to a high of 360 in 2017, nearly twice of what was seen in 2011. The number of regional trade agreements, which saw a continuous rise after the Asian financial crisis in 1997-89 to a peak of 34 in 2008, declined sharply to 8-9 in 2017. Most of the protectionist measures are not tariff-related like the US imposing higher tariffs on steel and aluminum imports last month. Over 60% of the G20’s restrictive measures are in the form of export measures, mostly tax-based, followed by trade finance and subsidies.
A report by Emkay Global says a high frequency in protectionist action is seen in sectors such as basic metals, organic chemicals, machinery, transport equipment and made-up textiles. Increase in protectionism stems from the fact that there is a disproportionate shift in economic gains because of trade liberalisation in favour of developing Asian economies. The report says, the US may be ring-fencing its recovery amid elevated public debt, further fiscal expansion and normalisation by the Federal Reserve.