The United States’ latest tariff increases on imports from China, Mexico, and Canada could pave the way for Indian exporters to expand their presence in the American market, experts say. Key industries such as agriculture, engineering, textiles, chemicals, and leather are expected to benefit from the shifting trade landscape.
During former President Donald Trump’s first term, India emerged as the fourth-largest beneficiary of Washington’s trade war with China. Now, with the Trump administration set to impose fresh 25% tariffs on imports from Mexico and Canada—alongside doubling tariffs on Chinese goods to 20%—India stands poised to capitalize once again.
Potential Gains for Indian Trade
According to the Global Trade Research Initiative (GTRI), India has an opportunity to secure alternative sourcing options, particularly from Canada, where key commodities may now be available at more competitive prices.
Canada is a crucial supplier of essential imports, including crude petroleum oil ($103 billion), refined petroleum oil ($12.9 billion), fertilizers ($3.1 billion), copper cathodes ($1.3 billion), gold ($4.3 billion), ethylene polymers ($2.2 billion), and plastics ($2.1 billion). Given India’s significant import requirements—$140.3 billion for crude oil alone—GTRI suggests that shifting some of these imports from traditional sources to Canada could be a cost-effective strategy.
“With US tariffs likely making Canadian products more competitive in the global market, India could evaluate sourcing these commodities from Canada at potentially lower costs, strengthening its trade partnership while reducing dependence on other high-cost suppliers,” said Ajay Srivastava, founder of GTRI.
Boost for Indian Exports and Investments
The Federation of Indian Export Organisations (FIEO) also sees potential advantages for Indian exporters. FIEO President-designate S.C. Ralhan stated that the increased US tariffs could create opportunities for Indian businesses in sectors such as agriculture, engineering, machine tools, and garments.
Additionally, GTRI predicts that escalating trade tensions could drive American investments into India, as companies seek alternative production bases to mitigate risks associated with tariffs.
Concerns Over US Trade Policy
While India stands to benefit from the latest trade disruptions, experts urge caution regarding future trade negotiations with the US. During his first term, Trump replaced the North American Free Trade Agreement (NAFTA) with the United States-Mexico-Canada Agreement (USMCA), citing the need for better terms.
“Now, he is again unhappy with his own deal and has imposed 25% tariffs on Canada and Mexico, violating USMCA’s terms. This highlights his disregard for negotiated trade agreements,” Srivastava noted.
He warned that if India pursues a Free Trade Agreement (FTA) with the US, it could face pressure to concede on multiple fronts, including tariff reductions, opening government procurement, reducing agricultural subsidies, and allowing unrestricted data flows—demands that India has historically resisted.
A Strategic Trade Proposal
Instead of a full-fledged FTA, Srivastava suggested that India could propose a “Zero-for-Zero Tariff” arrangement. Under this proposal, India would eliminate tariffs on a broad range of US industrial products, provided that Washington reciprocates by removing duties on Indian exports.
As global trade realigns due to US protectionist policies, India finds itself at a strategic crossroads—balancing the potential benefits of increased exports with the risks of future trade negotiations.
