The United States President-elect Donald Trump has already made it clear, even before taking office on January 20, 2025, that he will prioritise his agendas for the country without hesitation. His plans to make tariff changes already caused concerns among countries including China, Mexico and Canada.
During his campaign for the election, Trump also targeted India and called it the “biggest charger of tariff” on foreign goods. He also vowed that on coming back to power, his economic policy for international trade would be based on the principle of reciprocity.
Following his victory on November 6, the question raised whether Trump would include India in his tariff change plans. Especially when Trump already announced that on the first day of his office, he would impose a 25 per cent tariff on goods from Mexico, China and Canada.
Following this concern commerce and industry minister Piyush Goyal on Thursday expressed his confidence in the friendship between the President-elect and Prime Minister Narendra Modi.
"Mr Trump is a friend of India, a friend of Prime Minister Narendra Modi and I am sure this friendship will only continue to blossom and grow further as is evident from the various comments he has made so far," said the minister as quoted by PTI.
Goyal also urged not to jump the gun and let the new US administration take charge and express their formal and official views. He also reiterated that to the best of his understanding and experience, there should not be any problem with the Trump administration.
India less prone to Trump's tariff risks: Morgan Stanley
As Trump announced his decision to impose tax on three countries, Asian shares mostly declined on Tuesday. Trump called it a measure to force these countries to crack down on illegal immigration and drug smuggling into the US. He further suggested imposing an additional 10 per cent tariff on China.
However, India was not included in the list of countries.
Recently, international brokerage firm Morgan Stanley revealed that India is less prone to Trump's tariff risks.
“Structural tailwinds and continuation of the right policy mix will provide offset against tariffs,” said the chief Asia economist at Morgan Stanley, Chetan Ahya.
Another report from Motilal Oswal Private Wealth stated that Trump’s move could witness retaliatory behaviour from trade partners. Which might impact US exporters particularly, those in agriculture and technology.
Furthermore, Fitch Ratings has projected that tariff increases will have less impact on India as compared to other Asian countries, as the Indian economy is less export-oriented.
However, it is worth mentioning that US is India's top trade partner and its export dependency, particularly in IT, is majorly concentrated around the US. Any change of policy is likely to hurt India as 70 per cent of its IT exports revenue comes from the US.
