&imwidth=800&imheight=600&format=webp&quality=medium "Here's what India can do to counter Donald Trump's tariffs")
US President Donald Trump's tariffs took effect today. Ratings agency Finchsaid in a report recently that these tariffs could dampen the business sentiment in the country. These tariffs will make Indian exports to the United States uncompetitive, making goods too expensive. The impact of the tariffs on Indian exports and GDP could also force lakhs of people out of jobs. What can India do?
Radhika Rao, economist, DBS Bank, told Reuters that India can take several countermeasures, including seeking alternate markets, strengthening trade and investment ties through multilateral as well as bilateral trade deals. She said US exports amount to a modest 2.3 per cent of India's GDP, but it could have cascading impacts.
She, however, expressed hope that the door for negotiations could reopen later this year.
Rajeswari Sengupta, associate professor, Indira Gandhi Institute of Development Research, told the agency that the government should adopt trade-oriented policies to boost demand, including free trade agreements with multiple countries, andencourage foreign direct investment by lowering tariffs and non-trade barriers.
Around 70 per cent of Indian exports to the United States are under threat because they won't be able to compete with goods manufactured by regional rivals like Bangladesh and Vietnam.
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Aakanksha Shrawan, assistant professor at the National Institute of Public Finance and Policy, told Reuters that the government will have to offset the impact on jobs in affected sectors that are "labour-intensive".
Teresa John, lead economist, Nirmal Bang Institutional Equities, said that India can mollify the United States by buying more weapons and oil from it and lowering the tariffs on agricultural products like soybeans.
According to reports, India's merchandise exports to the US can drop by 40-45 per cent. GTRI said that India's exports can decrease from $87 billion to $49.6 billion this year.