India may take years to gain from trade diversion on US tariffs - Moody's
This story was originally published at 11:49 IST on 9 April 2025
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--Moody's: India has relatively low overall exposure, diverse exports to US
--Moody's: India may benefit from trade diversion post US tariffs
NEW DELHI - US President Donald Trump's sweeping tariff measures may benefit countries like India as companies seek to shift production to keep operating costs in check, but this would happen only over a number of years, Moody's Ratings said in a report on Wednesday. With the Asia-Pacific region accounting for over 40% of goods imported into the US, the rating agency warned that Trump's tariffs will eventually lead to reduced investment into the region.
The tariffs imposed by the US went into effect at 0930 IST Wednesday, with China facing the highest rate of 104% after it retaliated against Trump's initial tariff announcement of 34% on Beijing, on top of the existing 20%. Indian goods imported into the US currently face a tariff of 26%.
Moody's expects the new tariffs, ranging from 10%-104% in Asia Pacific, will hurt the 'China+1' strategy wherein the companies were looking to diversify their supply chains away from China. Yet countries like Malaysia, India, and the Philippines, duties on whom range from 10%-30%, may benefit from some trade diversion activity.
Among Asia-Pacific countries, Vietnam, Cambodia, Thailand, Taiwan, and China have the highest direct exposure. India has a relatively low overall exposure, but exports a diversified set of products to the US, Moody's said. Across the region as a whole, electronics, machinery and equipment as well as food and textiles, are among the most exposed sectors to US demand, the agency said.
While these tariffs are a credit negative for Asia-Pacific, Moody's expects the vast majority of countries to negotiate, rather than retaliate. India and the US are currently discussing signing a bilateral trade agreement, which could lead to a reduction in tariffs, as per reports. End
Reported by Anand JC
Edited by Vandana Hingorani
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