Trump's rates to shake up the export of engineering and electronic goods

Copyright © HT Digital Streams Limit all rights reserved. Industry Rhik Kundu 2 min Read 03 Apr 2025, 03:49 PM IST The US is one of India’s largest trading partners and its top export destination. (Reuters) Summary The imposition of reciprocal rates on India’s exports to the US is likely to have a major negative impact on the profitability and possibly volumes of sectors and businesses with a significant part of their revose of the US market, and he said the new delets are of the US market. Rates imposed by US President Donald Trump will disrupt Indian exports in key sectors such as engineering and electronic goods, which may reform supply chains and reduce export income as businesses use the impact. The US is one of India’s largest trading partners and its best export destination, with bilateral merchandise reaching $ 119.72 billion in FY24, including $ 77.52 billion to exports and $ 42.20 billion in imports. According to a report by Kotak Institutional Equities Thursday, the most important export sectors such as engineering goods, and specialty chemicals are one of the worst affected by the reciprocal rates. “The imposition of a uniform 26% reciprocal rate on the export of India to the US is likely to have a major negative impact on the profitability and possibly volumes of sectors and companies with a significant part of their revenue from the US market,” the report states. “We doubt companies can change and/or redirect meaningfully, which will lead companies to absorb a decent part of the higher rates. We see second-order price competition among exporters to the US and other countries, as global trading patterns adapt to high rates in the US,” it added. India’s exports to the US in FY24 included $ 17.63 billion in engineering goods and $ 10.05 billion to electronics, compared to $ 18.68 billion and $ 5.76 billion in the previous year, according to the Ministry of Trade. The US is especially one of the few countries where India enjoys a trade surplus, which has risen to $ 35.33 billion in FY24 from $ 27.69 billion the previous year. “The Tariff Reset will reshape Industry Competitiveness Across Export- and Import -Dependent Sectors. The US is a about $ 7 Billion Export Market for Indian Auto Component Manufacturers,” Said Sankar Chakraborti, MD & CEO, Acuité Ratings and Research Ltd. “The 25% Tariff on Automobiles and Components Could ExacerBate The Congestion for Our Exporters Competing with Vietnamese and Mexican counterparts. The USA, India’s top export market for auto parts, made up 27% of the consignments and reached $ 6.79 billion in FY24. Million in 2021-22 to $ 5.6 billion in 2023-24. Increase from 2017 to 2023, according to the research group. The point to note, however, is that countries that compete with us in the export market for some of these items, such as Vietnam, China, Bangladesh, and Cambodia were hit by even higher rates. Sinha, chief economist at CareEDE Ratings. “We expect the total impact of reciprocal tariff on India at about 0.2-0.3% of GDP. It takes into account some weakening of the Indian rupes that will partially blunt the impact of the higher rates,” Sinha added. Also read: Is Trump’s tariff rates compiled? Here is how they were calculated in its latest report on reciprocal rates, Jefferies Equity Research said that India is working on a bilateral trade agreement with the US, set on the late 2025 launch. The agreement could lead to higher defense and oil and gas oil and gas imports, which may strengthen the position of India in tariff negotiations for its exports. Catch all the industry news, bank news and updates on live currency. Download the Mint News app to get daily market updates. More Topics #Tariff Hike Mint Specials