High tariffs could fuel $5.76 bn decline in Indian exports to US: GTRI
With the changing global trade dynamics, think tank -- Global Trade Research Initiative (GTRI) has indicated that Indian merchandise exports to the US from sectors such as marine items, gold, electrical, and electronics are expected to decline by $5.76 billion this year due to increased American duties. However, it added that India's competitive position in select product segments may help cushion some of the losses. It expects sectors such as textiles made-up, apparel, ceramic products, inorganic chemicals, and pharmaceuticals to witness modest gains amid changing US trade policies.
Meanwhile, the GTRI expects several key products to see reduction amid US’ announcement of an additional 26 per cent duty on Indian goods from April 9 with pharma, semiconductors and certain energy goods being some exceptions. It estimates the exports of fish and crustaceans to fall by 20.2 per cent; iron or steel articles by 18 per cent; diamonds, gold products by 15.3 per cent; vehicle and parts exports by 12.1 per cent; and electrical, telecom, and electronic products by 12 per cent. In addition, other categories such as plastics, carpets, petroleum products, organic chemicals, and machinery are also expected to be negatively impacted.
According to the think tank, the high-value items such as energy products, including petroleum, solar panels, and pharmaceuticals as well as copper were accounted for $20.4 billion or 22.7 per cent of India's exports to the US in 2024 and they will continue to face only the standard MFN (Most Favoured Nation) tariff. While the key industrial goods such as steel, aluminium, automobiles, and auto parts which contributed $2.2 billion, or 2.5 per cent of India's total exports to US will face a 25 per cent tariff with no change to their MFN status. However, GTRI has pointed out that the largest impact falls on the remaining basket of goods, which were valued at $67.2 billion or 74.8 per cent of total trade, will be hit with a 26 per cent tariff. It also suggested that the trade dynamics could reshape across a wide range of industries if MFN tariffs still apply.
The GTRI has mentioned that while this assessment provides a structured and data-driven estimate of the impact of new tariffs, it has several limitations as it assumes that all other factors such as exchange rates, global demand, supply chain dynamics, non-tariff barriers and even US tariffs remain constant, which may not hold true in real-world trade scenarios. Additionally, the report also does not account for how quickly Indian exporters can adapt, shift markets, or adjust pricing strategies in response to tariff changes.
