Reciprocal tariffs could create a $37-billion opportunity for India as it gains competitive advantage: MC Analysis

Trump tariffs present an opportunity of India

US’ reciprocal tariffs are likely to hit India given its exposure to the US market, but could also create a $37-billion opportunity for the country as it will gain a comparative advantage in 384 categories compared with Asian peers.

New Delhi’s neighbours are likely to be more hurt, as India could shave off at least 10 percent of their total trade in tariffed items to Washington.

Bangladesh, which mostly deals in textiles, could lose $971 million of exports or 12.3 percent of the entire trade from the country in 2024.

The US has imposed a 37 percent duty on Bangladesh imports, 30 percent on Pakistan and 44 percent on Sri Lanka.

Pakistan, which is suffering from a crisis already, could see its earnings come down 11 percent if the entire trade from Islamabad is captured by Delhi, while Sri Lanka could lose 9.6 percent of its total trade in 2024.

In the case of Sri Lanka, 16 percent of 217 items which cost lower in 2024, are likely to cost more after the imposition of reciprocal tariffs, whereas tariffs would make 7 percent of items from Bangladesh more expensive than earlier.

In the case of Pakistan, $395 million of the $515 million the country would lose to India would come from textiles and clothing, in the case of Bangladesh the hit could be $953 million.

Over a tenth of Vietnam’s exported items are also expected to turn more expensive than India, but in terms of total trade the cost is expected to be much less at 2.7 percent of value of trade at $3.4 billion, of which electronics had a 32 percent share, while textiles and food had over 20 percent share.

Vietnamese exports to the US are set to get 46 percent more expensive than earlier.

China is expected to suffer a greater shift, as 7 percent of its $363 billion trade is expected to become cheaper for India.

Indonesia also is likely to witness 7 percent of its trade threatened by India, while for Thailand the hit could be 8.6 percent.

BRICS peer South Africa could potentially lose 5.6 percent of its trade to India, if the South Asian nation could cater to the US capacity.

Further analysis shows 57.3 percent of the opportunity would arise in electronics, while textiles could provide 12.5 percent, with rubber and footwear emerging as other contenders.

US President Donald Trump on April 3 imposed a blanket 10 percent tariff on all nations, with differential rates ranging from 15-50 percent levied on 56 other countries.