Understanding the Impact of US Tariffs on India

President Donald Trump's announcement of reciprocal tariffs has put India under the spotlight. Despite being labeled as one of the least vulnerable Asian economies in the face of these tariffs, India faces its own set of challenges. The country's exports to the US constitute a mere 2.2% of its GDP, indicating a relatively lesser exposure compared to other nations like Vietnam, where US-bound exports make up 25% of its GDP.

India's Countermeasures and Strategic Alliances

In response to the potential increase in tariffs, India is exploring ways to enhance its economic relationships with global partners such as the European Union, China, or Russia. This move aims to offset the reduced access to the US market and could potentially diminish American economic influence in the region.

Trade Relations and Sectoral Analysis

An analysis of Asia's value addition in global exports to the United States reveals that Vietnam is the most vulnerable to comprehensive US tariffs, followed by Taiwan, Thailand, Malaysia, Singapore, and South Korea. The computer & electronics industry faces the highest risk from supply-chain disruptions caused by tariffs.

India's primary exports to the US include precious stones, textiles, and pharmaceutical items. The country is also considering reducing tariffs on select items and extending benefits to position itself as a viable manufacturing alternative to China.