Trump's tariff threats present both opportunities and challenges for India's commerce with the US. Despite being exempt from recent tariffs, India's exports—particularly those in the defense, pharmaceutical, and IT sectors—may be negatively impacted.With US President Donald Trump's tariff threats hanging over the BRICS countries, including India, the country faces both tremendous prospects and challenges. Even though India was conspicuously left out of the most recent round of tariffs aimed at China, Mexico, and Canada, the US's protectionist stance may nevertheless have an impact on India's trade dynamics.
India's possibilities and challenges
India has both chances and hazards. If tensions increase, it may be able to expand its trade with the US, especially in the areas of energy and defense, or it may be disrupted by increased tariffs. India's economic position will depend on how it handles this challenging environment.
Uncertainty is increased by Trump's recent threat to impose 100% tariffs on BRICS countries, including India, if they devalue the US dollar. He forewarned that such levies would result from any move by the BRICS countries to develop a competing currency. Trump's tough approach to currency problems is a reflection of his larger trade strategy, which emphasizes reversing trade imbalances and reaffirming the US dollar's dominance. India's growing economic clout places it at the crossroads of these geopolitical and economic pressures.
India was left out of the latest tariffs, but protectionism is still a possibility.
Trump's ongoing emphasis on closing the US trade imbalance is evident in the most recent tariff announcements aimed at China, Canada, and Mexico. Although India has been left out of current tariff wave, analysts warn that if the US' protectionist streak persists, India may still be affected.
Trade between India and the US
Over 18% of India's overall exports are merchandise exports to the United States. India exported $77.5 billion worth of goods to the US in 2023–2024—more than it shipped to its next three biggest markets combined. The US trade deficit is growing as a result of India's lower US imports, which account for just over 6% of US imports.
Important imports and exports that make up India-US commerce
Petroleum crude, pearls, precious stones, electrical apparatus, airplane parts, and military equipment are among the items that India imports from the United States. Electronic components, communications equipment, pharmaceuticals, and petroleum products make up the majority of exports to the US. With India's diversification away from Russia, the commerce in defense equipment is also expanding.
Possible effects on Indian businesses of Trump's tariff threats
The planned tariffs by President Trump may have a significant effect on Indian sectors that depend significantly on US markets, such as IT and medicines. Increased tariffs may prevent Indian products from entering important markets, particularly those for pharmaceuticals and cars. India has responded to past US tariffs with counter-tariffs, indicating that it will do the same if fresh charges are imposed.
Trump's requests to India
Trump has called on India to buy more, especially security gear. He has emphasized how important it is to have more equitable trade partnerships. Although there are presently no tariff reductions anticipated under the Indo-Pacific Economic Framework (IPEF), India's reaction may involve tariff adjustments if a Free Trade Agreement (FTA) is pursued.
Will India be able to balance trade by making additional purchases?
As it moves away from Russia, India may buy more US goods, particularly defense equipment. This, however, depends on the commercial conditions that US businesses, especially those in the energy sector, give. In order to balance trade, American petroleum products' price competitiveness will be essential.
Trump's ongoing emphasis on closing the US trade imbalance is evident in the most recent tariff announcements aimed at China, Canada, and Mexico. Although India has been left out of current tariff wave, analysts warn that if the US' protectionist streak persists, India may still be affected.
Trade between India and the US
Over 18% of India's overall exports are merchandise exports to the United States. India exported $77.5 billion worth of goods to the US in 2023–2024—more than it shipped to its next three biggest markets combined. The US trade deficit is growing as a result of India's lower US imports, which account for just over 6% of US imports.
Important imports and exports that make up India-US commerce
Petroleum crude, pearls, precious stones, electrical apparatus, airplane parts, and military equipment are among the items that India imports from the United States. Electronic components, communications equipment, pharmaceuticals, and petroleum products make up the majority of exports to the US. With India's diversification away from Russia, the commerce in defense equipment is also expanding.
Possible effects on Indian businesses of Trump's tariff threats
The planned tariffs by President Trump may have a significant effect on Indian sectors that depend significantly on US markets, such as IT and medicines. Increased tariffs may prevent Indian products from entering important markets, particularly those for pharmaceuticals and cars. India has responded to past US tariffs with counter-tariffs, indicating that it will do the same if fresh charges are imposed.
Trump's requests to India
Trump has called on India to buy more, especially security gear. He has emphasized how important it is to have more equitable trade partnerships. Although there are presently no tariff reductions anticipated under the Indo-Pacific Economic Framework (IPEF), India's reaction may involve tariff adjustments if a Free Trade Agreement (FTA) is pursued.
Will India be able to balance trade by making additional purchases?
As it moves away from Russia, India may buy more US goods, particularly defense equipment. This, however, depends on the commercial conditions that US businesses, especially those in the energy sector, give. In order to balance trade, American petroleum products' price competitiveness will be essential.
0 Comments