Trump Reciprocal Tariff: Are Indian companies going to get big benefits from Trump's reciprocal tariff?

Donald Trump had promised to make America great if he became the President of America for the second time. However, it meant different things to different people. For Trump, it meant America's manufacturing-based economy. For this, he has announced to impose reciprocal tariff. This will make goods from other countries expensive in the American market. This will reduce their sales, which will reduce the interest of foreign companies in exporting to America. Trump has kept some minerals, pharma and some other sectors out of the reciprocal tariff.

Trump's goal is unlikely to be achieved

America has imposed tariffs ranging from 10 to 49 percent on 180 countries. In response to India's 52 percent tariff on American products, America has imposed a 26 percent tariff on India. Trump has imposed a 34 percent tariff on China. He has already imposed a 20 percent tariff on Chinese products. Due to this, the total American tariff on Chinese products has increased to 54 percent. American reciprocal tariff is going to have a big impact. But, the special thing is that it does not seem to solve the problem. Manufacturing companies have to invest a lot first. After that it takes a long time for the companies to start earning profits. In such a situation, there is little hope of America becoming a manufacturing hub soon due to Trump's reciprocal tariff.

Global GDP may decline by Rs 1.4 lakh crore

Second, the attempt to change the nature of the American economy will affect consumer sentiment. Third, it can also cause problems regarding demand and supply. Reciprocal tariffs will affect all kinds of goods. This can cause problems in the global supply chain. This will affect the growth of the economy. According to reports, reciprocal tariffs will affect global GDP by $1.4 trillion. The worst thing is that it will also increase inflation.

This is how it can affect India

As far as the impact of reciprocal tariff on India is concerned, it is important to understand that the Indian economy is a consumption-based economy. Exports account for about 12 percent of India's GDP. The share of American exports in this is only 2 percent. According to the SBI report, every 1 percent increase in tariff will reduce India's exports by 0.5 percent. The second thing to note is that America has imposed reciprocal tariff on every country. In fact, India may benefit from Trump's tariff in some ways.

Indian techstyles companies may benefit

If we talk about textile exports to America, India has to compete with the products of China and Vietnam. Trump has imposed 54 percent tariff on China and 46 percent on Vietnam. This may increase the attraction of Indian textile products in the American market. Secondly, America has kept the pharma sector out of reciprocal tariff. Many Indian pharma companies have a good presence in the American market. There will be no negative impact on their business.

If there is a recession in America, the IT sector will be affected

There are some sectors in India which can be affected by the US reciprocal tariff. About 50 percent of the revenue of IT companies comes from the US. But, Trump has not yet imposed tariff on services. Therefore, the export of IT services will not be affected. But, if the US economy goes into recession, it will affect the business of Indian IT companies. Trump's announcement of reciprocal tariff has led to a decline in the shares of IT companies.

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Doors are open for talks with America

We should not forget that the doors are open for talks with the US on reciprocal tariffs. Trump knows that India's contribution to the US's $1.2 trillion trade deficit is not much. India's trade surplus with the US has increased to $46 billion in the last 4 years. But, the US's share in India's exports has remained stable at 17-18 percent. This means that the reason for the increase in Indian exports to the US is that India's general exports have increased in the last few years. In such a situation, there is still scope for India to negotiate with Trump on the issue of tariffs. In such a situation, the US tariffs are not expected to have much impact on India.