A gantry cranes loads a shipping container onto a truck from a ship docked at the Jawaharlal Nehru Port, operated by Jawaharlal Nehru Port Trust (JNPT), in Navi Mumbai, Maharashtra, India. Photographer: Dhiraj Singh/Bloomberg

Retaliation, Not Trump’s Tariffs, Will Hurt India, Moody’s Says

It’s not Trump’s tariffs but the retaliation to it by the U.S.’ trade partners that should worry India more.

"Responses and rhetoric measures by other government and potentially more trade restrictions by the U.S. are so far in our view the downside scenarios,” Marie Diron, managing director, sovereign risk group at Moody’s Investors Service, told BloombergQuint in an interview. The tariffs imposed by the U.S. President on steel on aluminium, she said, won’t have a major impact.

Trump slapped a 25 percent tariff on steel imports and 10 percent on aluminium on Thursday. But he excluded Mexico and Canada till they reach a free-trade pact that satisfies the U.S. Trump kept the door open to exclude other countries and niche products. The European Union had earlier threatened to slap a levy on everything from whiskey to Harley Davidson motorbikes and there were demands in China to retaliate.

So far, India need not worry. Bilateral trade with the U.S. stood at $74.3 billion in 2017. While the world’s largest economy exported $25.7 billion worth of goods to India, its imports stood at $48.6 billion.

The world has moved much ahead of the Great Depression of the 1920s and ’30s, Diron said. “So far, we assume that the global trade architecture remains largely unchanged and that global economy continues to grow at a solid momentum and will continue to watch what is being announced and implemented.”