Imposition of high tariffs on China, Mexico, and Canada by the US is likely to help Indian exporters in increasing their shipments to the American market, according to experts. Sectors that can be benefited include agriculture, engineering, machine tools, garments, textiles, chemicals, and leather, they added.
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. With these tariffs on imports from Canada and Mexico, India has an opportunity to explore alternative sourcing options for key commodities that may become more competitively priced from these countries, think tank GTRI said. Canada, in particular, supplies several products that align with India’s major import needs.
In 2024, the US imported crude petroleum oil worth USD 103 billion, refined petroleum oil worth USD 12.9 billion, and fertilisers (USD 3.1 billion) from Canada. It also sourced copper cathodes (USD 1.3 billion), gold (USD 4.3 billion), ethylene polymers (USD 2.2 billion), and plastics (USD 2.1 billion). India’s import demand in these categories is substantial – USD 140.3 billion in crude oil, USD 42.5 billion in gold, USD 2.8 billion in copper, USD 2.2 billion in ethylene polymers, USD 1.3 billion in plastics, and USD 1.3 billion in fertilisers.
“With US tariffs likely making Canadian products more competitive in the global market, India could evaluate sourcing these commodities from Canada at potentially lower costs, strengthening its trade partnership while reducing dependence on other high-cost suppliers,” GTRI founder Ajay Srivastava said. President-designate of Federation of Indian Export Organisations (FIEO) SC Ralhan said tariffs on China, Mexico and Canada could help Indian exporters in sectors like agriculture, engineering, machine tools, and garments.
Tariffs would affect exports from these three nations to the US as they would push the prices of their goods in the American market, making them less competitive. “Indian exporters would have to tap into these opportunities,” Srivastava said. The escalation in the trade war is expected to help India increase its exports and attract investments from American companies, GTRI noted.
In his first term, Trump replaced NAFTA with USMCA (US-Mexico-Canada FTA) in 2018-19, arguing it was outdated and hurt American workers, Srivastava said. “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 noted.
“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 protection, and allowing unrestricted data flows, demands India has resisted for decades.” Instead of an FTA, Srivastava said India may offer a “Zero-for-Zero Tariff” deal by proposing to eliminate tariffs on most US industrial products, provided America does the same for Indian goods.
Experts pointed out that in his first term, Donald Trump replaced NAFTA with USMCA (US-Mexico-Canada FTA) in 2018-19 and now he is unhappy with his own deal and has imposed 25% tariffs on Canada and Mexico, which underscores his disregard for negotiated trade agreements. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
