The new ‘Reciprocal Tariff’ implemented by US President Donald Trump is sure to have a deep impact on the world economy. But the concern being expressed about this tariff is not really that much for Bharat at least. You can now consider it as President Donald Trump’s inclination towards Prime Minister Narendra Modi or the positive attitude of the current US government towards the NRIs who are driving the American economy, whatever it may be; overall India’s interests do not seem to be affected in this, rather on the contrary, this tariff policy has certainly opened up new opportunities for India in many areas.
If seen, more than 60 countries are being affected by America’s tariff war. America’s trade deficit with China is very high. Therefore, it has imposed the highest tariff on China. America has announced to impose 54% tariff on all Chinese imports. In fact, Trump’s announcement has added a 34 per cent so-called “reciprocal tariff” to the existing 20 per cent tariff on all goods imported from China to the US. The US has imposed tariffs of 49 per cent on Cambodian goods, 46 per cent on Vietnam, 44 per cent on Sri Lanka, 37 per cent on Bangladesh, 31 per cent on Switzerland, 30 per cent on South Africa, 36 per cent on Thailand, 32 per cent on Indonesia and Taiwan, 29% on Pakistan, 26% on India, 25% on South Korea, 24 per cent on Malaysia and a minimum of 10 percent on other countries. Along with this, there are many products which the US has kept away from its new tariff policy and has left the opportunity open for many countries to earn full profit.
If the goods are getting affected by the tariff, then it is because their demand is high in the US, most of which is currently met by China and other countries. Now many new opportunities have opened up for India in these very areas. If we study a little back in the context of India, India has had a huge trade deficit with China, which was about $52 billion in 2018-19. There was a lot of pressure on the Indian government to reduce it, so it was seen that the Modi government started promoting indigenous manufacturing to reduce its import dependence. Work was started simultaneously in many areas, including the Atmanirbhar Bharat Abhiyan, promotion of indigenous production in areas like electronics, pharmaceuticals and medical equipment, efforts in mobile phones, automobiles and solar panels. The results of which are now visible on a large scale.
If we look at the new opportunities, India can bring a large stock of US dollars to itself by increasing its manufacturing capacity in electronics and machinery. India’s electronics exporters also benefit because after high tariffs were imposed on countries like Vietnam, India is a big hope for traders. Similarly, the impact on machinery, auto parts and toys imported from China and Thailand is seen to be benefiting India. The increase in tariff on Chinese clothes in the US has given the Indian textile industry a new opportunity to increase its share in the US market. With the US imposing higher tariffs on clothes imported from China and Bangladesh, Indian clothes will naturally become cheaper, which will increase the demand for Indian products.
It is a good thing that the tariffs do not seem to have a direct impact on the IT sector. Although it is certain that the slowdown and inflation in the American market will affect it, but this effect does not seem to be very high, because the IT professionals of India are economic than those of any other country, which also has the best quality in itself. So even in the future, Americans will continue to trust India in the IT sector. Apart from this, India has a golden opportunity to import cheap agricultural products to America and it can increase its agricultural exports (such as rice, spices, and tea) much more than at present, because due to the increased tariffs on China, American companies will want to get cheap goods, which is not possible for India to fulfill in today’s time.
Indian pharma industry is already performing well in chemicals and pharmaceuticals. Every year, about nine billion dollars worth of medicines are exported from India to America, which is the largest industrial export sector of the country. In such a situation, this new policy of America is providing it an opportunity to become more global. Along with this, the countries on which America has set high tariff rates are also going to impose heavy tariffs on American goods in return, some have even started announcing their increased tariff policy. Naturally, in such a situation it has become easier for India to create favourable markets for its goods in these countries as well. After China, many countries of Europe are affected the most. China has openly come out against America. China’s Commerce Ministry has clearly said that China will take firm counter-measures to protect its rights and interests. The United States has prepared the so-called ‘reciprocal tariffs’ on the basis of unilateral assessment, which is not in accordance with international trade rules. It has asked America to cancel this new tariff.
Canadian Prime Minister Mark Carney has announced a 25% tariff on vehicles from America, it is going to impose heavy tariffs on many other American goods. French President Emmanuel Macron has asked his country’s companies to postpone investments in the US. Brazilian President Luiz Inacio Lula da Silva has already said that he has started taking all necessary measures keeping in mind the interests of his country. In such a situation, it is natural that India can increase the export of its goods in all these countries and other Asian countries. However, India is also seeing losses in some sectors such as jewellery, dairy, auto parts etc. Because India exports jewellery worth about 11 billion dollars to the US every year, which is 30% of exports. In the new tariff, the US has increased the duty on jewellery by an additional 18 to 20 percent.
The 2.4 percent duty that was earlier levied on the goods of auto ancillary companies is likely to increase to 25 percent. But even after this, what is clearly visible is that this tariff war started by America has provided India with new economic opportunities in many areas and in many countries. In fact, now we should take full advantage of the new opportunities that we have got by diverting our exports to other countries instead of depending only on American markets.
