The US decision to impose high tariffs on China, Mexico, and Canada is set to create new opportunities for Indian exporters, according to trade experts. With American importers now facing higher costs from these nations, India has a chance to expand its footprint in the US market across several key sectors, including agriculture, engineering, machine tools, garments, textiles, chemicals, and leather.

How US Tariffs Could Benefit Indian Exporters

During Donald Trump’s first term, when the US imposed higher duties on Chinese imports, India emerged as the fourth-largest gainer, as American businesses sought alternative suppliers. Now, with Trump’s administration imposing 25% tariffs on Mexico and Canada—set to take effect this Tuesday—India is once again in a strong position to increase its exports.

Additionally, the US has doubled tariffs on Chinese goods to 20%, further disrupting trade routes and making Indian products more competitive in the American market.

According to Ajay Srivastava, founder of think tank GTRI, this trade shift presents a major opportunity for India to step in as a reliable supplier across multiple sectors.

India’s Opportunity to Strengthen Trade with Canada

The tariffs on Canadian exports will make certain products more affordable for other nations, and India could capitalize on lower prices for key imports such as:

Crude Petroleum Oil – US imports from Canada: $103 billion
Refined Petroleum Oil – $12.9 billion
Fertilizers – $3.1 billion
Gold – $4.3 billion
Copper Cathodes – $1.3 billion
Ethylene Polymers – $2.2 billion
Plastics – $2.1 billion

India already has a strong demand for these commodities, with import figures showing:

Crude Oil Imports: $140.3 billion
Gold: $42.5 billion
Copper: $2.8 billion
Ethylene Polymers: $2.2 billion
Plastics: $1.3 billion
Fertilizers: $1.3 billion

By strengthening trade ties with Canada, India can source these products at lower costs, reduce dependency on other high-cost suppliers, and diversify its import basket.

“With US tariffs likely making Canadian products more competitive in the global market, India could evaluate sourcing these commodities from Canada at potentially lower costs, strengthening its trade partnership,” said Srivastava.

Key Sectors Where Indian Exporters Can Benefit

According to S.C. Ralhan, President-designate of the Federation of Indian Export Organisations (FIEO), US tariffs on China, Mexico, and Canada could create huge export opportunities for Indian industries, especially in:

Agriculture
Engineering Goods
Machine Tools
Garments & Textiles
Leather & Chemicals

As tariffs increase prices for American buyers, Indian exporters must move quickly to fill the gap and attract new trade deals in these sectors.

“Indian exporters need to actively tap into these opportunities as the US market shifts,” Srivastava added.

Potential Boost in US Investments in India

Beyond exports, the escalating trade war could also attract investments from US companies into India. As American businesses seek alternative supply chains, India could position itself as a manufacturing hub, drawing fresh foreign direct investment (FDI).

The Risk of an Unstable US Trade Policy

Despite the opportunities, experts warn against blindly pursuing a Free Trade Agreement (FTA) with the US.

During his first term, Trump replaced NAFTA with the USMCA (US-Mexico-Canada Agreement), arguing that it was unfair to American workers. However, he is now dismantling his own deal, imposing new 25% tariffs on Canada and Mexico—a move that violates the terms of the USMCA.

“This shows Trump’s disregard for negotiated trade agreements. India should be cautious about entering into a comprehensive FTA with the US,” Srivastava warned.

He also pointed out that the US may demand major concessions from India, such as:

Reducing agricultural subsidies
Opening government procurement to US firms
Weaker patent protections
Unrestricted data flows

India has long resisted such demands and must carefully evaluate its trade strategy before entering negotiations.

India’s Alternative Approach: A ‘Zero-for-Zero Tariff’ Deal

Instead of a full FTA, Srivastava suggests that India could propose a “Zero-for-Zero Tariff” deal, where:

India eliminates tariffs on most US industrial products
In return, the US removes tariffs on Indian goods

This would create a fair trade arrangement without forcing India to make unwanted policy concessions.

A Turning Point for Indian Trade?

With the US ramping up tariffs on China, Canada, and Mexico, Indian exporters stand to benefit significantly by:

Increasing exports in high-demand sectors like agriculture, engineering, textiles, and chemicals
Strengthening trade relations with Canada for cheaper raw materials
Attracting more investments from US companies shifting supply chains
Carefully negotiating trade agreements to avoid excessive US demands

However, India must act strategically, ensuring it does not enter into one-sided deals while maximizing the opportunities created by the shifting global trade landscape.

How will US tariffs on China, Mexico, and Canada benefit Indian exporters?

• With American import costs rising, Indian exporters can offer competitive alternatives in agriculture, textiles, engineering, and machine tools.

What new trade opportunities does India have with Canada?

• India can source cheaper commodities such as crude oil, fertilizers, copper, and gold from Canada, reducing costs and strengthening trade ties.

Will the US tariff hike lead to more investments in India?

• Yes, as American companies seek alternatives, India could attract FDI in manufacturing and exports.

Should India negotiate a Free Trade Agreement (FTA) with the US?

• Experts advise caution, as the US could demand major concessions on agriculture, patents, and data regulations.

What alternative trade deal can India propose?

• India may offer a Zero-for-Zero Tariff deal, eliminating tariffs on US industrial products only if America does the same for Indian goods.