India to Benefit from Trump’s Tariffs on Canada and Mexico
In a move that could have significant implications for India’s export sector, President-elect Donald Trump has announced plans to impose a 25% tariff on Canada and Mexico. According to a Moneycontrol analysis, India is likely to benefit from the tariffs, particularly in categories like gems and jewelry, iron and steel, and processed food.
The analysis reveals that the top 25 commodities account for 75% of India’s merchandise exports to the US. While India has a 2.9% share of US imports in these categories, Canada and Mexico have a combined share of 28.7%. The tariffs could give India an advantage, especially since Canada and Mexico are already losing ground in 43% of these categories.
Gems and jewelry, for instance, was India’s top export to the United States in 2023, with a 13.6% share in US imports. However, Canada and Mexico combined have a 21% share in this category. Similarly, while India has a 6.8% share in iron and steel and associated industries, Canada and Mexico have a combined share of 64.4% in US imports.
The tariffs could also benefit India in the processed food category, where it already has a 9% share in US imports. In contrast, Canada and Mexico have a 20.5% share in US imports under this category.
Experts believe that Trump’s decision to impose tariffs on Canada and Mexico could be a game-changer for India’s exports to the US. “India has been looking to increase its exports to the US, and this move could provide a significant opportunity,” said an expert. “With its existing strengths in categories like gems and jewelry, iron and steel, and processed food, India could capitalize on the tariffs to increase its market share in the US.”
Furthermore, Trump’s threat to impose a 10% tariff on China could also aid India. Historical data shows that US imports from China declined by 24% and 47% in categories with 7.5% and 25% tariffs, respectively. This could create new opportunities for India to increase its exports to the US.
India’s exports to the US have been growing rapidly in recent years. According to a Moneycontrol analysis, India’s exports to the US grew by $25 billion between FY19-24. However, only a fifth of this growth came from traditional categories like medicine and jewelry, while the rest came from new avenues like smartphones.
In conclusion, President-elect Trump’s decision to impose tariffs on Canada and Mexico could be a significant boost to India’s export sector. With its existing strengths in key categories, India could capitalize on the tariffs to increase its market share in the US. As the US trade dynamics continue to evolve, India is well-positioned to take advantage of new opportunities and increase its exports to the US.