An escalation of trade war between the United States (US), Canada, Mexico, and China could increase the threat of dumping of goods to India, experts have warned.
New Delhi is in wait and watch mode as US President Donald Trump unleashed a 25 per cent tariff on imports on Canada and Mexico, and a 10 per cent levy on Chinese imports. These tariffs will take effect from Tuesday.
Even though Trump has repeatedly labelled India a high-tariff nation, he has yet to take action against New Delhi.
Ajay Sahai, director-general and chief executive officer, Federation of Indian Export Organisations, said US tariffs on Chinese goods would increase the cost of products.
“This may give a competitive edge to Indian products over Chinese goods due to lower tariff,” Sahai said.
There may, however, be a risk of uncertainty among exporters due to unpredictability of the future of tariff impositions.
For over a month, the commerce department officials have closely studied the opportunities and challenges – in terms of if there are tariffs – whether for all countries or country-specific, how it can impact specific sectors and what can be the mitigation effort.
India has identified electronics, pharmaceuticals, textiles, auto components, and chemicals to boost exports to the US amid possibility of a trade war between Washington and Beijing.
Biswajit Dhar, distinguished professor at Council for Social Development, said it is yet to be seen whether India is able to take advantage of higher tariffs on other countries. He asserted that New Delhi needs to be prepared.