The Donald Trump presidency in the US could be a positive for India on the trade front if it plays its cards well, and is ready to take up the opportunities that a speeding up of the realignment of the global supply chains may throw up.
Trump’s statements in the run up to the elections have been critical of the US’s low import tariffs vis-a-vis its trade partners. This, he highlighted, have enabled the world to find a ready market in the US, and the country to run huge trade deficits with major economies. The trade-weighted average import tariff rate for industrial goods in the US is just 2%. About 94% of US merchandise imports are industrial goods, and half of these have duty-free access to the country.
During the campaign, Trump announced a plan to raise import duties to 20% across the board and put a 60% duty on Chinese imports. On some products like electric vehicles he even talked of 100% duty.
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The US is the second largest exporter in the world behind China, but is the largest importer. According to estimates its trade deficit of the US in goods and services in 2023 was $ 773 billion with exports of $ 3.0 trillion and imports of around $ 3.8 trillion.
“We (India) has to be ready for a deal with the US before across the board tariff hikes upends our exports to the US,” Partner-Tax and Economic Policy (International Trade), EY India Agneaswar Sen said
“When he (Trump) pushes up tariffs he is looking for a deal. We have to be ready to give concessions on things that matter to him, maybe agriculture products like nuts which they are trying to sell to India,” he added.
The US is the most lucrative market for Indian exports. In 2023-24 total merchandise trade between India and the US was $ 119 billion. India’s exports were $ 77.5 billion and imports $ 42.1 billion resulting in a surplus of $ 35 billion. Among the top 10 trading partners, the US is the only one with which India runs a trade surplus. Added to the goods trade is the massive services trade between the two countries.
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