UPSC Prelims Practice Questions — Escalating tariff trade war ‘devastating’ for Canada: U.S. official

Q1. Under the United States–Mexico–Canada Agreement (USMCA/CUSMA), what minimum proportion of a passenger vehicle's components must originate in North America for the vehicle to enter duty-free?

  • A. 62.5 per cent of the vehicle's components, computed on net cost
  • B. 70 per cent of the vehicle's components, computed on net cost
  • C. 75 per cent of the vehicle's components, computed on net cost
  • D. 85 per cent of the vehicle's components, computed on net cost

Q2. Which one of the following statements regarding the legal status of the USMCA vis-à-vis NAFTA is correct?

  • A. It entered into force on 1 July 2020 and superseded NAFTA, except for those NAFTA provisions specifically referred to in it
  • B. It entered into force on 1 January 2018 and NAFTA continues to apply in its entirety to all investment disputes among the three parties
  • C. It entered into force in 2020 and permanently abolished every binational panel review mechanism that had been inherited from NAFTA
  • D. It entered into force in 2020 and its provisions apply exclusively to trade in goods, all services trade remaining governed by NAFTA

Q3. With reference to the dispute settlement mechanism of the World Trade Organization, consider the following statements: 1. If consultations fail to settle a dispute within 60 days of receipt of the request for consultations, the complaining party may request the establishment of a panel. 2. The Appellate Body is composed of seven persons, of whom three serve on any one case. 3. Appellate proceedings shall as a general rule not exceed 60 days and in no case exceed 90 days from the date of formal notification of the appeal. 4. A panel report is adopted only if the Dispute Settlement Body decides by consensus to adopt it. Which of the above is/are NOT correct?

  1. If consultations fail to settle a dispute within 60 days of receipt of the request for consultations, the complaining party may request the establishment of a panel.
  2. The Appellate Body is composed of seven persons, of whom three serve on any one case.
  3. Appellate proceedings shall as a general rule not exceed 60 days and in no case exceed 90 days from the date of formal notification of the appeal.
  4. A panel report is adopted only if the Dispute Settlement Body decides by consensus to adopt it.
  • A. 1 and 2
  • B. 2 and 3
  • C. 1, 3 and 4
  • D. 4 only

Q4. According to the WTO's own description of a typical dispute settlement case, how many main stages does the process comprise?

  • A. Two, namely adjudication by a panel and implementation of the ruling
  • B. Three, namely consultations, adjudication and implementation of the ruling
  • C. Four, namely consultations, good offices, adjudication and implementation
  • D. Five, namely notification, consultations, arbitration, adjudication and implementation

Q5. The August 2026 trade negotiations between Washington and Ottawa, whose collapse triggered the 50 per cent tariffs, were led on the American side by which one of the following?

  • A. The Department of Commerce, which administers the country's foreign trade zones programme
  • B. The Department of Transportation, whose Secretary is Sean Duffy
  • C. The Department of the Treasury, through its Office of Foreign Assets Control
  • D. The Office of the United States Trade Representative, headed by Jamieson Greer

Q6. The 50 per cent duties imposed on Canadian goods in August 2026 were levied under a rarely used statutory provision permitting duties against countries deemed to discriminate against American commerce. That provision is:

  • A. Section 232 of the Trade Expansion Act, 1962
  • B. Section 338 of the Tariff Act, 1930
  • C. Section 301 of the Trade Act, 1974
  • D. Section 201 of the Trade Act, 1974

Q7. The Government of India's export-diversification consultations with chemicals, gems and jewellery and other exporters, held in response to the steep United States tariffs, were convened by which one of the following?

  • A. The Department of Revenue in the Ministry of Finance, which notifies customs duty rates
  • B. The Department for Promotion of Industry and Internal Trade in the Ministry of Commerce and Industry
  • C. The Department of Commerce in the Ministry of Commerce and Industry
  • D. The Economic Diplomacy Division in the Ministry of External Affairs

Q8. Approximately what proportion of India's total merchandise exports to the United States was officially estimated to fall within the ambit of the 25 per cent reciprocal tariff?

  • A. About 35 per cent of India's total merchandise exports to that market
  • B. About 45 per cent of India's total merchandise exports to that market
  • C. About 55 per cent of India's total merchandise exports to that market
  • D. About 70 per cent of India's total merchandise exports to that market

Q9. In India, once the Directorate General of Trade Remedies records a final finding recommending an anti-dumping duty, the duty is actually imposed by which one of the following?

  • A. The Department of Revenue in the Ministry of Finance
  • B. The Department for Promotion of Industry and Internal Trade
  • C. The Directorate General of Foreign Trade in the same Ministry
  • D. The Trade and Commerce Vertical of the NITI Aayog

Q10. Which one of the following statements about India's trade remedy duties is correct?

  • A. Safeguard duty is levied under Section 9A of the Customs Tariff Act, 1975 and applies exclusively to imports originating in countries that are not WTO members
  • B. Countervailing duty is levied under Section 9 of the Customs Tariff Act, 1975 and must in every case be fixed at a rate higher than the subsidy granted
  • C. Anti-dumping duty is levied under Section 8B of the Customs Tariff Act, 1975 and is imposed on all imports irrespective of any finding of injury
  • D. Anti-dumping duty is levied under Section 9A of the Customs Tariff Act, 1975 and may not exceed the margin of dumping in relation to the article

Q11. With reference to the Canada–United States trade relationship as reported around the August 2026 tariff escalation, consider the following statements: 1. Nearly 72 per cent of Canada's goods exports in the preceding year went to the United States. 2. The Canadian goods covered by the new 50 per cent United States tariffs accounted for about one-fifth of Canada's annual shipments to that country. 3. The two countries together sold each other roughly $880 billion worth of goods and services in the preceding year. 4. Crude petroleum and oils obtained from bituminous minerals rank among Canada's largest merchandise exports by value. Which of the above is/are NOT correct?

  1. Nearly 72 per cent of Canada's goods exports in the preceding year went to the United States.
  2. The Canadian goods covered by the new 50 per cent United States tariffs accounted for about one-fifth of Canada's annual shipments to that country.
  3. The two countries together sold each other roughly $880 billion worth of goods and services in the preceding year.
  4. Crude petroleum and oils obtained from bituminous minerals rank among Canada's largest merchandise exports by value.
  • A. 1 and 3
  • B. 2 only
  • C. 2 and 4
  • D. 1, 2 and 4

Q12. Consider the following statements comparing successive 2025 editions of the OECD Economic Outlook: 1. The June 2025 edition projected global GDP growth to slow from 3.3 per cent in 2024 to 2.9 per cent in both 2025 and 2026, assuming that tariff rates prevailing in mid-May were sustained. 2. The same edition projected Canada's GDP growth to weaken from 1.5 per cent in 2024 to 1.0 per cent in 2025, citing trade tensions with the United States. 3. The September 2025 Interim Report revised the estimated effective United States tariff rate at end-August down to about 9.5 per cent, the lowest level recorded since the mid-1930s. Which of the statements given above is/are correct?

  1. The June 2025 edition projected global GDP growth to slow from 3.3 per cent in 2024 to 2.9 per cent in both 2025 and 2026, assuming that tariff rates prevailing in mid-May were sustained.
  2. The same edition projected Canada's GDP growth to weaken from 1.5 per cent in 2024 to 1.0 per cent in 2025, citing trade tensions with the United States.
  3. The September 2025 Interim Report revised the estimated effective United States tariff rate at end-August down to about 9.5 per cent, the lowest level recorded since the mid-1930s.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3