India poised to gain from Trump’s potential tariff hike on China, says report

Following Donald Trump's victory in the U.S. presidential elections, a report from CareEdge suggests that India could benefit from potential shifts in global trade dynamics if Trump moves forward with plans to impose high tariffs on Chinese imports. By reshaping the global supply chain away from China, these policies could create new opportunities for India.

According to the report, Trump’s proposed trade measures include a 60 percent tariff on imports from China. Additional tariffs of 10 to 20 percent on goods from other countries are also being considered. Such policies aim to reduce the U.S. dependence on Chinese imports, a move that could disrupt established trade channels and prompt companies to seek alternative manufacturing hubs outside of China. “India could benefit from any re-orientation of the global supply chain away from China,” the report noted.

As the report explains, these measures would likely drive U.S. companies to explore manufacturing options in other countries to avoid the tariffs. India could emerge as a viable destination, offering a potential boost to its manufacturing sector and export economy. However, the report warns that these high tariffs may have broader economic effects, especially within the United States. It notes, "Higher tariffs could result in disruption of global trade flows and overall weaker trade growth. They will also lead to inflationary pressure in the US economy, with upward pressure on prices of imported goods."

This potential price increase in the U.S. could impact global trade flows, leading to slower trade growth worldwide. For India, a reorientation of supply chains presents both an opportunity and a risk. While India could attract new business, a general slowdown in global trade could reduce demand for Indian exports, affecting various sectors within the country.

Trump's proposed tariffs are not limited to China. The report highlights that he has also focused on Mexico, with plans for a 100 to 200 percent tariff on cars manufactured in Mexico. Trump has also proposed a 25 percent tax on other imports from Mexico, should Mexico fail to reduce border crossings into the United States. These proposed tariffs aim to prevent Chinese firms from establishing manufacturing in Mexico to bypass U.S. import taxes. "Through these moves, Trump aims to prevent Chinese companies from setting up plants in Mexico to avoid US tariffs," the report states.

While these policies present challenges to global trade, they also offer India a strategic opportunity. As global firms consider alternative manufacturing locations, India could position itself as a reliable hub if it can strengthen its industrial infrastructure and improve its business climate.

Ultimately, India's success in capitalizing on these shifts will depend on its ability to streamline business processes, enhance infrastructure, and position itself as an attractive alternative in the evolving global supply chain landscape.

(With inputs from ANI)