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Economy

ASEAN, Mexico, Canada outpaced India in US-China trade war

A GTRI report reveals that Mexico, Canada, and ASEAN gained more from the US-China trade war than India, which saw a USD 36.8 billion rise in exports, mainly fueled by growth in electronics, pharmaceuticals, and engineering goods, placing it in sixth position.

News Arena Network - New Delhi - UPDATED: December 15, 2024, 03:13 PM - 2 min read

Mexico, Canada, ASEAN gained more from US-China trade war than India: GTRI


Mexico, Canada, and the 10-nation Southeast Asian bloc ASEAN have gained more from the US-China trade war than India, according to a report by economic think tank GTRI.  

The report emphasised the need for India to strengthen its domestic supply chains, produce critical intermediates to reduce dependence on China, and improve cost efficiency and the ease of doing business to enhance the competitiveness of its industries and boost exports to the United States.  

With Donald Trump potentially returning to the US presidency, the evolving trade dynamics could present significant opportunities for Indian industries, as he plans new tariffs targeting countries including Mexico, Canada, and China.  

The US-China trade war, which began in 2018 under Trump’s administration, introduced tariffs on key sectors and has notably reshaped global trade patterns, although it failed to achieve its intended objectives.  

“Key beneficiaries of the trade war were Mexico, Canada, and ASEAN nations, collectively accounting for 57% of the growth in US imports. India also saw gains, with its exports to the US increasing by $36.8 billion, led by electronics, pharmaceuticals, and engineering goods,” said GTRI founder Ajay Srivastava.  

Mexico emerged as the top beneficiary, with exports to the US rising by $164.3 billion between 2017 and 2023. Canada followed with $124 billion, while Vietnam, South Korea, and Germany saw increases of $70.5 billion, $46.3 billion, and $43 billion, respectively. India ranked sixth, with its $36.8 billion growth driven by exports of smartphones, pharmaceuticals, and engineering goods.  

Among India’s export growth drivers, smartphones and telecom equipment saw a $6.2 billion increase, accounting for 17.2% of the overall rise. Medicines contributed $4.5 billion (12.4%), petroleum oils $2.5 billion (6.8%), and solar cells $1.9 billion (5.3%).  

The report urged India to increase local value addition in its exports, as many rely on imported components. For example, most smartphone parts, solar cell components, and up to 70% of Active Pharmaceutical Ingredients (APIs) used in medicine production are imported, primarily from China.  

GTRI also suggested that the United States limit the use of Chinese inputs in all products exported to its market by revising non-preferential rules of origin, a measure it argued would be more effective than imposing higher tariffs.  

The US, India’s largest trading partner with bilateral trade exceeding $190 billion, remains pivotal to India’s economy. To adapt to a possible Trump-led trade landscape, India could consider modestly reducing import tariffs, potentially lowering the average rate to around 10% without significantly impacting revenue, the report noted.  

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