India could benefit from reciprocal tariffs even as world fears Trump tariff threats. 3 reasons why

reciprocal tariffs, which will likely be announced by US President Donald Trump on April 2, India could see a minimal macro impact or even benefit from the fresh salvo, provided it plays the cards rightly.

Before moving on to how India could gain from the tariffs, we should acknowledge that there will be some impact, albeit indirect and minimal. India’s exports would feel the pinch if global trade and growth slow down amid rising trade tensions. However, there is near consensus that this event will most likely be transient unless it evolves into a full-scale trade recalibration.

India's exposure to the US has grown over the years, with FY24 exports of $77.5 billion, but the majority of these are in categories where India is either not easily substitutable or where US consumers would bear the cost of tariffs.

«Unless it triggers retaliatory spirals or disrupts supply chains, this is more bark than bite. That said, the long-term implication is that India must move up the value chain and diversify its export base if such frictions become more frequent,» said Sonam Srivastava, Founder and Fund Manager at Wright Research.

Here are three reasons why India could gain from the tariff war.

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Strong domestic-focused economy

India’s domestically driven economy may offer some resilience to Trump's tariffs, with exports of goods and services accounting for 21% of GDP as of FY24. In fact, the share of goods exports alone is even lower, at 12% of GDP.

Even though the exact nature of reciprocal tariffs is not