What is the benefit of India in the global trade amid the US tariff flips?

Copyright © HT Digital Streams Limit all rights reserved. Deepa Vasud of 4 min read 19 May 2025, 11:25 am Ist as one of the world’s top three steel producers, aluminum and cement, India is well placed to become part of the new, less China-centric supply chains. (Beeld: Pixabay) Summary The reciprocal rates of the US on April 2 place India to an advantage, but the flip-flops by US President Donald Trump have added doubt and confusion. Will India still benefit from the global trade? The contours of global trade are constantly shifting, and India finds itself on an increasingly complicated landscape. The US-China relationship oscilling between tariff reductions and technology restrictions-has left many countries uncertain about their export prospects. Recent developments include the Trump administration’s first free trade agreement with the United Kingdom, which has linked lower rates to exclude China from some supply chains, followed by a temporary tariff cut from the US China and then a diverse ban on the use of Huawei AI. Read it | Mint exclusive: India-American trading transaction before July 8, speaks next week. This volatile approach is in doubt the ‘China Plus One’ strategy and raises concerns about whether other emerging economies can get similar tariff proposal, which can erode the tariff -driven export profits of India. So, where does it leave India? Can it convert these tariff shifts into strategic benefits in the trade recovery? India’s strategic positioning is an important consideration that China has established itself as a world leader in industries that integrals economic as well as national security, such as steel, aluminum, cement, shipbuilding and car manufacturing. The US is aware of the strategic risk of relying on China, especially during conflict or pandemics. India, although it does not match the manufacturing skills of China, has a unique advantage: the ability to scale without being considered a threat. As one of the world’s top three steel producers, aluminum and cement, India is well placed to become part of the new, less China-centric supply chains. Printing and drawing factors To judge the trade prospects of India, it is essential to distinguish between ‘push’ and ‘draw’ factors. Printing factors stem from external global shifts, while drawing factors are rooted in India’s own economic structure. Initially, the high rates on China offered a positive push for Indian exports. The subsequent relief of these rates weakens, but does not completely deny this benefit. In addition, two geopolitical factors still work in India’s favor. Read it | RBI prepares itself for Trump Tariff Falls with liquidity movements, India’s relatively modest manufacturing share, rising from 1.5% in 2004 to 2.9% in 2023, contrasts sharply with China’s jump from 8.6% to 28.8% in the same period. Ironically, this perceived weakness can turn into an asset, as India is not seen as a direct participant in China. Second, India has never been a pivot to redirect Chinese exports to the US, unlike countries such as Vietnam or Mexico. And given India’s relationship with China, it is unlikely to take on this role in the future. It positions India as a more reliable partner for re -aligning trade. On the migration, India has two benefits, both come from its unique economic structure. The first is the large domestic market: domestic consumption is the mainstay of economic growth, and contributes to two -thirds of its gross domestic product. In contrast, China’s strong investment and export focus led to the excessive low private consumption rate for its level of revenue. The fact that China makes up 30% of the world manufacturing, but only 11% of consumption is one of the global imbalances that the current US administration wants to correct. In addition, robust domestic consumption is a source of ease for foreign enterprises that erect export -oriented facilities. For example, Maruti Suzuki, who was erected with the Japanese collaboration in the 1980s, is the market leader in passenger cars and also a leading car exporter (it has been in the India cars since 1986). In a Flip scenario, Apple Inc., which plans to collect all US bound iPhones in India, eventually also provide India’s fast-growing smartphone market. The idea is not far -fetched: By 2030, India is expected to have 773 million consumers, only to China and much higher than comparable emerging economies. The second drawing factor is the growing importance of India in future industries and technologies. Of the 44 future technologies analyzed by the 2023 Critical Technology Tracker, the US and China lead the world into a major research capacity with a major impact, but India and the United Kingdom, together with Australia and Japan, appear regularly among the countries in line. These countries may work together to create an alternative ecosystem to supplement China’s striking progress in advanced technologies. Read it | Asian factories carry scars of Trump’s rate. The way forward is expected to decline in 2025 on the back of rising trade tensions. A tariff advantage would have been incredibly useful as Indian exporters compete for part of the shrinking trade pie. But given that more countries become protectionist, it is not sustainable to rely on rates. Read also | Donald Trump’s chaos goes beyond rates. Here is how some try to go instead, India should increase its strengths: young workforce, strong growth, rapid digitalization and core industry capacity; And boost this macro-positive with business-friendly policies to trade. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #wone Factors #In Maps #Trade #india #united State #China Mint Specials