How U.S. Tariffs on Trade Partners May Benefit Indian Exporters
Recent tariffs imposed by the U.S. on China, Mexico, and Canada may enhance Indian exports to the American market, particularly benefiting sectors such as agriculture, engineering, and textiles. As these tariffs increase the cost of goods from affected countries, Indian exporters have a unique opportunity to gain competitiveness. Experts advise caution for India in future trade negotiations with the U.S. to protect its interests.
Experts predict that the imposition of elevated tariffs by the United States on China, Mexico, and Canada will provide Indian exporters with increased opportunities to enhance their shipments to the American market. Sectors poised to benefit include agriculture, engineering, machine tools, textiles, chemicals, leather, and garments. During President Donald Trump’s initial term, India benefitted significantly from the spikes in tariffs on Chinese goods, securing its position as the fourth-largest beneficiary of this shift.
Starting today, the U.S. is enforcing a 25% tariff on imports from Mexico and Canada while doubling the tariff on Chinese imports to 20%. This move is expected to decrease the competitiveness of products from these countries, thereby allowing Indian exports to gain traction in the U.S. market. SC Ralhan, President-designate of the Federation of Indian Export Organizations (FIEO), emphasized the need for Indian exporters to seize these newfound opportunities amidst escalating tariffs from competing nations.
The economic think tank GTRI notes that this intensification of trade conflict may facilitate an increase in Indian exports and stimulate investments from American corporations. Higher tariffs on Chinese products could further empower India to fortify its manufacturing sector and expand its export base. Ajay Srivastava, Founder of GTRI, commented on Trump’s discontent with his own trade agreements, specifically pointing to his criticisms of the USMCA, which replaced NAFTA based upon perceived shortcomings.
Furthermore, Srivastava highlighted the necessity for India to approach negotiations with caution, especially regarding a potential comprehensive Free Trade Agreement (FTA) with the U.S. He indicated that India might have to confront additional demands, such as concessions on government procurement and agricultural subsidies. In lieu of an FTA, Srivastava suggested that India could propose a ‘Zero-for-Zero Tariff’ approach, which would entail the mutual elimination of tariffs on a wide range of industrial products by both nations.
In conclusion, the heightened tariffs imposed by the U.S. on key trade partners present a unique opportunity for Indian exporters to expand their foothold in the American market. Key sectors potentially benefitting from this shift include agriculture, engineering, textiles, and more. However, India must tread carefully regarding trade negotiations with the U.S. to ensure favorable terms that do not compromise its national interests.
Original Source: www.business-standard.com
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