Tariffs on China, Mexico and Canada may boost Indian exports to US: Experts

Imposition of high tariffs on China, Mexico, and Canada by the US is expected to help Indian exporters in increasing their shipments to the American market, experts say.

They added that sectors which can be benefited include agriculture, engineering, machine tools, garments, textiles, chemicals, and leather.

India was the fourth-largest gainer when the US imposed higher duties on Chinese goods during US President Donald Trump's first tenure.

The Trump administration is imposing 25 per cent tariffs on Mexico and Canada and it will take effect on Tuesday. The US has also doubled the tariff on all Chinese imports to 20 per cent.

"This can help Indian exporters in sectors such as agriculture, engineering, machine tools, garments, textiles, chemicals, and leather," President-designate of Federation of Indian Export Organisations (FIEO) SC Ralhan said.

The tariffs would affect exports from China, Mexico and Canada to the US as they would push prices of their goods in the American market, making them less competitive.

"Indian exporters would have to tap into these opportunities," he said.

Economic think tank GTRI too said that the escalation in the trade war is expected to help India increase its exports and attract investments from American companies.

The higher tariffs on Chinese products present an opportunity for India to strengthen its manufacturing sector, it added.

GTRI Founder Ajay Srivastava said that Trump was dissatisfied with its terms and, during his first term, replaced it with USMCA (US-Mexico-Canada FTA) in 2018-19, claiming NAFTA was outdated and hurt American workers.

"Now, he is again unhappy with his own deal and has imposed 25 per cent tariffs on Canada and Mexico starting today, violating USMCA's terms. This highlights his disregard for negotiated trade agreements. To avoid a similar situation, India should be cautious about negotiating a comprehensive FTA with the US," he said.

"Worse, at the negotiating table, the US may demand India not just tariff cuts but also additional concessions, such as opening government procurement, reducing agricultural subsidies, weakening patent protections, and allowing unrestricted data flows, demands India has resisted for decades," he added.

Instead of an FTA, Srivastava said India may offer a "Zero-for-Zero Tariff" deal to the USA by proposing to eliminate tariffs on most industrial products from the US, provided the US does the same for Indian goods.