Will India gain as Trump points tariff bazooka at China?

“It is time for them to pay a very big price!” said US President-elect Donald Trump as he outlined his intention to impose stringent tariffs on goods from China, Canada and Mexico, after he takes office in January. What comes as a big challenge for China could turn into an opportunity for India. Experts, however, emphasised that India would have to overcome some challenges and grab that opportunity.
Trump said he would sign an executive order immediately upon taking office, imposing a 25% tariff on all goods from Mexico and Canada to crack down on illegal immigration and drug smuggling into the US. More importantly, Trump proposed an additional 10% tariff on imports from Chinese, citing the Xi Jinping government didn’t do enough to curb the smuggling of synthetic opioid fentanyl into the US, that was killing 70,000 Americans annually.
“I have had many talks with China about the massive amounts of drugs, in particular fentanyl, being sent into the United States — but to no avail,” Trump said.
The proposed move on tariffs is in line with Trump’s broader trade policy and poll promises, and sparked interest from countries that have spent the last decade catching up with Chinese exports and trying to compete on the global stage.
India would be one such country that would like to seize any opportunity that emerges from tariff hikes on China-made products.
In 2022, the US imported USD 536 billion in goods from China, which was 16% of its total imports, according to the Office of the United States Trade Representative.
The question if India can gain from the tariff hike on China is complex and depends on several factors.
Nilanjan Ghosh, Director at New Delhi-based think-tank, Observer Research Foundation (ORF), says, “This can definitely create an alternative opportunity for India, similar to the China+1 phenomenon that happened during Covid years.”
“Many corporates with factories, establishments and offices affected by higher tariffs would be prone to diversify their production chains to geographies like India, Vietnam, Indonesia and South Korea,” Nilanjan Ghosh, Director at ORF, tells India Today Digital.
In an interview with India Today TV, geopolitical expert Farid Zakaria said he believed that Trump 2.0 would be a “golden opportunity” for India to end China’s monopoly on manufacturing.
Zakaria’s remarks came after Trump won the election and a couple of days before he announced his intention of hiking tariffs.
“What you are likely to see with India is the continuation of that upward-moving trajectory, closer cooperation, and greater determination to create an Asia where you have less dependence on China and greater interdependence with India,” Zakaria said in an interview with India Today TV’s News Director Rahul Kanwal.
“American businesses are already undergoing a long-term process of de-risking their dependence on China. CEOs are actively diversifying supply chains,” he explained.
Farid Zakaria notes that while US businesses shifting supply chains from China may benefit countries like Vietnam and Malaysia, they can’t fully meet the demand.
“Only India has the scale and capacity to step in,” Zakaria told India Today TV.
At this juncture, India must effectively harness its demographic dividend, says Nilanjan Ghosh, highlighting its edge over other emerging economies.
“Also, don’t forget that of all these economies mentioned, the IMF projects India as the only ‘7%+ growth economy’. So, India’s competitive advantage in international trade is palpable, its export competitiveness is only slated to growth vis- -vis other economies,” Ghosh tells India Today Digital.
With Donald Trump announcing tariffs on Canada, China, and Mexico, concerns are rising about whether Indian exports and services could face similar measures in the future.
“I don’t think so. The US economy is a consumer-driven economy. It can be compared to a supermassive blackhole that consumes almost everything in its vicinity,” says ORF’s Ghosh.
Zakaria offers a different aspect to the chances of Indian exports being imposed with high American import tariffs. He hints at Indian import tariffs being one of the highest, calling them “protectionist”.
Even Donald Trump talked about it in public during his first term as the US President.
“I am going to India next week, and we are talking trade. They have been hitting us very hard for many years. I really like PM Modi, but we got to talk a little business. One of the highest tariffs in the world is India,” Trump said in February 2020, days before the mega ‘Namaste Trump’ event in Ahmedabad.

Even if Trump tariffs threaten India, Zakaria says, that may lead to India deciding to bring down its own tariffs. “Part of the deal is [could be] that Indian tariffs go down,” he says.
India has been consistent with high import tariffs, citing its commitment to protect its own domestic industries.
India has been actively promoting itself as a manufacturing hub through initiatives like the ‘Make in India’ campaign Production Linked Incentive (PLI) scheme and duty exemptions.
India aims to export USD 2 trillion of goods and services by 2030, almost three times the estimated figure for 2023-24, which is about USD 750-800 billion, as per data by the Indian Economic Diplomacy Division.
“If Indian policymakers can create a more favourable business environment, including simplifying regulatory frameworks and improving infrastructure, India could attract more foreign investment and become a significant beneficiary of the US-China trade standoff,” Zakaria told India Today TV.
However, Zakaria also cautioned that India’s ability to capitalise on this opportunity depends on several factors.
“India needs to address its own economic challenges, such as high inflation and fiscal deficits, to make itself an attractive destination for foreign investors,” he said.
Moreover, India’s participation in global and regional trade agreements such as the Indo-Pacific Economic Framework (IPEF) and its potential re-entry into the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) could further enhance its position as a preferred trading partner of the United States.