The US’s significant tax increases against China, Mexico, and Canada may open the floodgates for American exporters, giving them a unique opportunity to grow their footprint in the country.
According to experts, important industries like crops, engineering, fabric, chemicals, and leather are likely to benefit from the change. India emerged as the fourth-largest success from Washington’s trade war with China during Trump’s second term, and history may be about to repeat itself.
India is once more prepared to capitalize on shifting trade dynamics with the Trump administration set to impose new 25 % tariffs on imports from Mexico and Canada, along with a sharp increase in duties on Chinese imports, doubling them to 20 %.
Does the US taxes benefit India?
These new business barriers, according to the think tank GTRI, give India the chance to access other procurement options, especially from Canada, where important commodities may now be available at more economical prices, according to a report from the new agency PTI.
Canada is crucial in providing necessary goods that are in line with India’s high-demand areas. Prior to 2024, the US imported significant volumes of fertilizers ($ 3.1 billion ), refined petroleum ($ 12 billion ), and crude petroleum ($ 103 billion ) from Canada.
Copper cathodes ($ 1.3 billion ), gold ($ 4.3 billion ), ethylene polymers ($ 2.2 billion ), and plastics ($ 2.1 billion ) were some other important imports.
India’s buy requirements are important for a number of important commodities:$ 1.3 billion for plastics,$ 1.3 billion for fertilizers,$ 2.8 billion for copper,$ 2.8 billion for metal,$ 2.2 billion for ethanol polymers,$ 1.3 billion for simplistic oil, and$ 1.3 billion for platinum.
Ajay Srivastava, founder of GTRI, said that India could consider sourcing these products from Canada at lower costs, strengthening its trade partnership, and reducing its dependence on other high-cost suppliers, given that US tariffs are likely to increase the global market’s demand for American products.
Additionally, FIEO President-designate SC Ralhan more stated that the US tariffs on China, Mexico, and Canada might benefit American exporters in fields like crops, executive, machine tools, and clothing.
GTRI noted that India could profit from more exports and more flows of American investment as a result of the rising trade tensions. In response to concerns about archaic laws and negative effects on American workers, Trump replaced NAFTA with USMCA in his first term, according to Srivastava.
He has started imposing 25 % tariffs on Canada and Mexico starting today, breaking USMCA’s terms, and is now angry with his own package. His disrespect for negotiated deal partnerships is demonstrated by this. India may be cautious about negotiating a thorough FTA with the US in order to prevent a situation like this,” he continued.
The US properly demand at the table that India make more concessions, such as allowing unlimited data flows, reducing agrarian subsidies, lowering tariffs, and opening government procurement, he said.
Srivastava suggested that India might suggest a” Zero-for-Zero Tariff” arrangement rather than pursuing a full-fledged Free Trade Agreement (FTA ).
In accordance with this agreement, India did agree to levy tariffs on a wide range of US commercial products, with the condition that Washington will do the same by removing import duties.
