EXPERTS were divided over whether India would gain after US President-elect Donald Trump revealed on November 25 his plan to sign an executive order on January 20, the inaugural day of his second term in office, to target three of Washington’s major trading allies – Canada, Mexico and China — in terms of tariffs.
The Republican leader’s plan to impose 25 per cent extra tariffs on imports from the US’s northern and southern neighbors and 10 per cent additional tariffs on imports from China is aimed at addressing challenges such as the inflow of migrants and drugs. India, which Trump has also criticized over high tariffs, was absent from the list. According to some observers, it could allow it to raise its exports in areas such as textiles, electronics, machinery, and pharmaceuticals, a report by India’s Money Control reported.
New Delhi is also one of Washington’s biggest trading partners with an annual trade worth more than $190 billion. While India’s merchandise exports to the US increased by 46 per cent between FY20 and FY24, imports from the US also went up by nearly 18 per cent, the report added.
Indian products to become cheaper in US market?
Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO), told Money Control that the South Asian nation’s absence from the list of countries would help its exports and investments. According to him, higher American tariffs hiking the cost of imports from the three countries that Trump has vowed to target could make Indian products relatively cheaper in the US market, benefiting the exporters.
Sahai also feels that a trade diversion would be witnessed as American companies banking on imports from the three listed nations might diversify their supply chains to include India. It could see a higher investment in India’s manufacturing sectors to meet demand and standards in the US, the FIEO official told Money Control.
He also cited that India’s exclusion might indicate a strategic interest by Washington to deepen trade ties with New Delhi and that in turn, could lead to favorable trade deals.
However, Ajay Srivastava, founder of New Delhi-based think tank Global Trade Research Initiative, was not ready to arrive at early conclusions.
Speaking with the news outlet, he said the incoming president’s policies may be wider. According to him, the latest announcement is linked to problems such as drug and immigration and more steps could be seen coming into play. He advised India to wait and watch.
The report also said that retaliatory or pre-emptive moves from countries like China could affect certain Indian sectors such as the solar industry.
Philippe Varin, chair of the International Chamber of Commerce, felt India might have short-term gains if the incoming Trump administration imposes relatively higher duties on China and that a clash of tariffs between the world’s two largest economies could hit the entire global trade in the medium term, the Money Control report added.
South Asians Globally
