Impact of Potential US Tariffs on India: Export Losses and Negotiation Opportunities
Emkay reports that India risks losing $6 billion to $31 billion in exports to the US due to projected tariffs. Key vulnerable sectors include apparel and jewelry, although negotiations with the US may mitigate some impacts. Opportunities for increasing energy and defense imports could present “easy wins,” aiding India amidst ongoing geopolitical trade challenges.
A recent report from Emkay projects that India may incur export losses of $6 billion to the United States should a 10% tariff be implemented, with potential losses rising to $31 billion under a 25% tariff scenario. Although the specifics of reciprocal tariffs remain unclear, it is anticipated that a general tariff on Indian goods would be most feasible.
The report underscores significant impacts on crucial sectors such as automotive, pharmaceuticals, and electronics, noting that the most vulnerable areas for India include apparel and gemstones/jewelry. However, it also identifies certain “easy wins” that could assist in easing the potential losses, including increasing imports of energy and defense from the United States.
Furthermore, the report suggests that India could engage in negotiations by offering concessions in sectors that will not adversely affect its domestic industries while appealing politically and economically to the Trump administration, in exchange for mitigation of tariffs elsewhere.
The analysis states that the ongoing trade war instigated by the US encompasses more than just trade issues, hinting at China as a continual target. However, India faces challenges in capturing opportunities due to its limited increase in global market share in lower-skill industries vacated by China during the post-COVID period.
On April 2, the Trump administration plans to implement reciprocal tariffs on trading partners under its “Fair and Reciprocal Plan.” Additionally, Arvind Virmani of Niti Aayog indicated that a bilateral trade agreement between India and the US might be established by year-end. On March 29, President Trump expressed optimism regarding the tariff situation, stating that the “tariffs are going to work out well between New Delhi and Washington, DC.”
In summary, the potential imposition of tariffs by the United States could lead to significant export losses for India, particularly in sectors considered vulnerable. Despite these challenges, avenues for negotiating concessions may exist, offering India potential relief in the face of tariffs. The broader geopolitical context and the ongoing trade war with China further complicate the situation, highlighting the limited opportunities available for India to expand its market presence.
Original Source: m.economictimes.com
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