The article first appeared in BBC News on April 4, 2025.
A new wave of US tariffs announced by Donald Trump has rattled global markets, pushing several economies toward the brink of a trade war. The European Union has pledged a unified response, and China has threatened strong countermeasures, highlighting growing tensions in global commerce.
Leading credit rating agencies like Fitch have warned that the broad imposition of tariffs could slow down global growth, increase inflation, and potentially trigger recessions in some parts of the world.
India, Asia’s third-largest economy, now finds itself at a critical juncture as it tries to chart a sustainable export strategy in this volatile environment.
While China faces tariffs of up to 34%, and countries like Vietnam and Cambodia are hit with 46% and 49% duties respectively, India has been comparatively less affected, facing a 27% tariff. Nonetheless, this remains a significant burden, especially for labor-intensive sectors such as textiles, leather, and engineering goods.
“This will hurt India’s major export categories and affect domestic demand,” says Priyanka Kishore of Asia Decoded. “It’s a setback at a time when GDP growth is already fragile.”
However, experts believe that these disruptions also present an opportunity for India to enhance its export strategy. With the US imposing harsher tariffs on regional competitors, global buyers might consider shifting supply chains to India—especially in sectors like garments and footwear. “If we can move quickly, we can bring some of that business to India,” says veteran fund manager Nilesh Shah. “But execution is key.”
The Indian government must act decisively. Public policy expert Rahul Ahluwalia suggests that now is the time to conclude a trade deal with the US. With the United States accounting for 18% of India’s total exports—worth around $91 billion—a strong agreement could help cushion the impact of the tariffs. Talks are already underway, but Ahluwalia believes the timeline may need to be advanced in light of recent developments.
Beyond the US, India must also diversify its trade relationships. According to the Global Trade Research Initiative (GTRI), focusing on markets with lower tariffs—such as the European Union, Southeast Asia, and Africa—should be a part of India’s broader export strategy.
India’s ability to adapt and respond to these shifting dynamics could define the next phase of its trade and economic growth…
Read more at BBC News
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