US President Donald Trump has announced to implement heavy tariffs on its three major business partners China, Mexico and Canada. 25% tariff has been imposed on imports coming from Mexico and Canada and has doubled the duty on all sugar imports to 20%. This step is part of the policy of Trump administration, in which he has said to pressurize these countries to prevent the smuggling of Phantanel and its chemical elements.
However, this decision has caused upheaval in the global trade market and experts consider it a new trade war. The direct effect of these conditions will be that products of these three countries will become expensive in the US market, which will reduce their demand and can benefit Indian exporters.
Golden opportunity for Indian exporters!
According to experts, this decision is going to prove to be a big opportunity for Indian exporters. According to him, many sectors of India will benefit from the weakening grip of China, Mexico and Canada in the US market. These include industries like agricultural products, engineering goods, machine tools, apparel, textiles, chemical and leather.
Due to increase in tariffs, the price of products affected will increase in the US market, which will make it less competitive in the US market. In such a situation, Indian exporters should take advantage of this opportunity and increase their reach. For example, the increase in the price of electronics coming from Avocado or China coming from Mexico may increase demand for Indian options.
India was successful earlier also
This is not the first time that India is likely to benefit from American tariffs. During Trump’s first term, the US imposed high duty on Chinese imports. During that time, India was at number four in the list of countries taking advantage. At that time, Indian exporters increased their stake in the US market by staggering China.
Now again, due to the creation of the same situation, India has a chance to find ways to spend their goods in the middle of the expensive goods of other countries. The Economic think tank GTRI also believes that the existing tariffs promote India’s exports and will also encourage American companies to invest in India. This will strengthen India’s manufacturing sector, which can be a big encouragement for schemes like ‘Make in India’.
India will become ‘winner’ in Trade War?
GTRI says that this move of America can deepen global trade war. China has already announced a counter-tariff, including 10-15% additional fees on US agricultural products. Canada has also announced a 25% tariff on US imports of $ 20.7 billion, while Mexico has also said to react.
India can get the biggest benefit of this mutual conflict. According to GTRI, American companies will now turn to countries which are not affected by this trade war. India can be an attractive option for them. Apart from this, high tariffs on Chinese products will give India a chance to increase its manufacturing and play a big role in the global supply chain.
Caution on FTA is important
This situation is beneficial for India. But experts also warns that care will have to be taken in negotiations on any free trade agreement (FTA) with the US. According to GTRI, Trump had previously replaced the North American Free Trade Agreement (NAFTA) with USMCA but now he is unhappy with his own agreement and is putting tariffs on Mexico-Canada. This shows that the Trump administration can make any changes about trade agerms.
The US can also demand concessions from India to open government procurement, reduce agricultural subsidy, relaxation of patent rules and data flow from India. India has been opposing these demands for decades. GTRI suggests that India offer the ‘Zero-for-Zero Tariff’ deal under which both India and America can eliminate tariffs on industrial products which will be beneficial for both countries and will also protect India’s interests.
What should India do?
There are some challenges with this occasion because prices are increasing there due to American tariffs, which can also affect Indian exporters. For example, American retailers ‘Target’ and ‘Best Bye’ have already spoken of increasing prices. In addition, the retaliation of countries like Canada and Mexico can affect global trade and economy.
Indian exporters will have to take immediate steps to take advantage of this situation. The government will also have to focus on strengthening the supply chain, increasing production and marketing in the US market. Also, it is necessary to further liberalize policies to attract investment. It is certain that this tariff decision of America has brought a historic opportunity for India. In such a situation, if Indian exporters and government adopt the right strategy, then in addition to increasing the share in the US market, India can also emerge as a new force in global trade.