US tariff hikes give an edge to India over Asian peers: SBI

The recent 27 percent tariff hike imposed by US President Donald Trump on Indian goods is expected to have only a “limited” impact on India’s economy, as exports to the US account for just 4 percent of the country’s GDP, according to an SBI Research report.

Despite the tariff increase, India has a relative advantage over its Asian counterparts, as the levies imposed on Indian goods are lower compared to China (34 percent), Thailand (36 percent), Indonesia (32 percent) and Vietnam (46 percent). This lower tariff burden is expected to enhance India’s competitiveness in certain export sectors over the long term. We expect India will have a competitive advantage and export-oriented impact on various sectors, the report stated.

Countries reliant on textile exports, such as Bangladesh, China and Vietnam, are expected to face reduced demand due to inflationary pressures. While India’s textile exports to the US stood at approximately $7 billion between April and December in FY25, the sector may experience short-term setbacks. However, the long-term outlook remains positive as India seeks to expand its market share.

The engineering goods sector could face major challenges due to supply chain disruptions and potential declines in export revenue. In electronics, India is better positioned than major exporting nations, with China facing tariffs ranging from 54 to 79 percent. India’s electronics exports to the US, which amounted to roughly $9 billion in April-December FY25, account for 15 percent of total exports—giving it a competitive edge in this sector.