After the victory of Donald Trump in the United States (US) Presidential elections, India could benefit from any re-orientation of the global supply chain away from China, according to a report from Care Edge. As per the report, Trump has proposed imposing high tariffs on imports from China, which could lead to changes in global trade dynamics, creating opportunities for India.
It said, "India could benefit from any re-orientation of the global supply chain away from China”. The report highlighted that Trump's plans include imposing a 60 per cent tariff on imports from China, as well as additional tariffs ranging from 10 per cent to 20 per cent on imports from other countries. These measures are intended to reduce the United States' reliance on Chinese imports, potentially disrupting existing trade patterns.
As companies look to diversify their sourcing away from China to avoid these tariffs, India could emerge as an alternative destination for manufacturing and exports. The report said, "Higher tariffs could result in disruption of global trade flows and overall weaker trade growth. They will also lead to inflationary pressure in the US economy, with upward pressure on prices of imported goods". However, the report also points out that these tariffs may trigger inflation in the United States by raising the prices of imported goods, which could affect global trade flows and economic stability.
While India stands to gain from any re-orientation of supply chains, a broad slowdown in global trade would have mixed effects on its economy. Weaker trade growth worldwide could dampen demand for Indian exports, affecting various industries within the country. As per the report, Trump's proposed tariffs extend beyond China. The president-elect has also targeted Mexico with plans to impose a 100 per cent to 200 per cent tariff on cars manufactured there. Additionally, he has proposed a 25 per cent tax on all other imports from Mexico unless it intensifies efforts to reduce border crossings into the U.S.
This is aimed at preventing Chinese companies from setting up manufacturing facilities in Mexico to bypass U.S. tariffs, and it reflects Trump's broader strategy to encourage job growth within the American automobile and manufacturing sectors. "Through these moves, Trump aims to prevent Chinese companies from setting up plants in Mexico to avoid US tariffs," the report said.
While these potential policy shifts represent challenges to global trade, they also provide India with a strategic opportunity to attract businesses looking to shift operations away from China. Overall, India's ability to capitalise on this shift will depend on its efforts to strengthen its industrial infrastructure, improve ease of doing business, and establish itself as a reliable manufacturing hub in the global supply chain. (ANI)
