Exports of Indian products to US markets will increase; Possibility created by imposing high tariffs on three countries

The US's imposition of high tariffs on China, Mexico, and Canada may help Indian exporters increase their exports to the US market. The Trump administration has imposed a 25 percent tariff on Mexico and Canada. Also, the duty on all Chinese imports has been doubled to 20 percent.

SC Ralhan, nominated for the post of President of the Federation of Indian Export Organizations (FIO), said that imposing tariffs on the three countries is expected to benefit Indian exporters in sectors like agriculture, engineering, machine tools, apparel, textiles, chemicals, and leather.

Ralhan said, the high tariffs imposed by US President Donald Trump will affect exports from China, Mexico, and Canada to the US, as they will increase the prices of their products in the US market. This will make all three countries less competitive on the export front. This is a big opportunity for Indian exporters, who have to take advantage of it to increase their access to the US market.

During the first term of US President Donald Trump, when the US imposed high tariffs on goods imported from China, India was the fourth largest beneficiary.

Economic think tank GTRI says that this decision of the US has increased the possibility of deepening of the trade war. This is expected to help India increase its exports to the US markets and attract investment from American companies. High tariffs on Chinese products also provide an opportunity for India to strengthen its manufacturing sector.

GTRI founder Ajay Srivastava has indicated that Donald Trump himself is apparently dissatisfied with the move after replacing the North American Free Trade Agreement (NAFTA) with the US-Mexico-Canada FTA (USMCA) during 2018-19. In order to avoid this kind of situation, India has to be cautious about finalizing a comprehensive FTA with the US.

Worse still, the US can demand, during negotiations, not only tariff cuts from India but also other concessions like opening government procurement, reducing farm subsidies, watering down patent protection, and allowing free movement of data. But India has held firm. Instead of an FTA, India can offer to the US a 'zero-for-zero tariff' deal by committing to the dismantling of tariffs on the bulk of industrial goods if the US does the same to Indian goods, Srivastava added.