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Trump 2.0 | Higher tariffs as bargaining tool may hit Indian trade hard

New Zealand 22.01.2025
Source: DairyNews.today
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India's farm, pharma, dairy sectors will likely face challenges; exporters will need to move up the value chain to leverage China Plus One strategy.
Trump 2.0 | Higher tariffs as bargaining tool may hit Indian trade hard

Trump 2.0 and its Impact on Indian Trade

Looming large over the global trade space is the shadow of Donald Trump's tariffs. India's farm, pharma, and dairy sectors might face significant challenges, and exporters would be required to move up the value chain to fully utilize the China Plus One strategy. Trump's approach to tariffs suggests a potential escalation in trade tensions, which could have diverse implications for international trade.

Window of Opportunity for India

According to Gary Hufbauer, Senior Fellow at the Peterson Institute for International Economics, Trump's tariffs might provide an opportunity for India if they adopt a more welcoming approach to foreign manufacturing firms. Such a policy shift could attract manufacturing activities displaced from countries like China.

Complaints on Indian Trade Practices

The United States Trade Representative (USTR) has highlighted India's high tariff rates, especially on agricultural goods which are among the highest in the world. This has led to American exporters voicing complaints about the complexity and unpredictability of India's customs system.

Potential Pressures and Negotiations

Bilateral negotiations might be complicated by political and religious sensitivities, particularly concerning the import of dairy products. Additionally, the US might press India to review its trade barriers on US-made goods, including pharma and medical equipment.

Impact on the US Economy

Trump's tariffs could potentially raise the US price level significantly, affecting consumers and businesses that rely on imported goods. During Trump's first term, tariffs were shown to hurt manufacturing employment by raising the prices of imported components.

Implications for the Global Economy

The new tariff policies might lead to shifts in global manufacturing, with countries like Vietnam benefitting from increased manufacturing activity. For Indian manufacturers, navigating this landscape will be complex due to existing challenges such as low margins and regulatory hurdles.


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