Donald Trump’s tariff influence on commerce: India could profit from decrease US duties; Moody’s sees manufacturing enhance amid APAC disruption

India could face fewer tariff headwinds from the US than lots of its Asia-Pacific friends, serving to the nation entice higher funding flows and strengthen its place as a world manufacturing hub, Moody’s Scores mentioned on Thursday.The scores company, in its outlook on APAC sovereigns, famous that a number of export-heavy economies throughout the area have been hit by steep US tariff hikes in April 2025. International locations like Vietnam and Cambodia—earlier beneficiaries of a provide chain pivot out of China—now threat dropping their price benefit amid rising commerce frictions, PTI reported.“In distinction to international locations like Cambodia and Vietnam, India has the potential to emerge as a beneficiary of a tariff-driven shift in funding and commerce flows. India could also be topic to decrease tariffs than many in APAC,” Moody’s mentioned, pointing to a possible upside for the Indian economic system.The company famous that India’s current free commerce settlement (FTA) with the UK and ongoing negotiations with the EU may additional assist its push to grow to be a most well-liked different to China in international provide chains. Nonetheless, it cautioned that Washington’s push to reshore choose industries may restrict the scope of good points India can seize.India is at the moment negotiating a mini commerce cope with the US, as a 90-day suspension of a 26% reciprocal tariff on Indian items expires on July 9. Whereas the US has retained its 10% baseline tariff, India is urgent for full exemption from the extra duties.The talks are at a essential stage, with New Delhi looking for extra entry for its labour-intensive exports, and the US pushing for concessions on farm produce. Officers from either side are aiming to shut negotiations earlier than the tariff suspension deadline.Moody’s warned that persistent commerce coverage ambiguity is hurting funding selections and weighing on long-term financial planning throughout the area. “Uncertainty about commerce coverage and a possible overhaul of world commerce have raised cyclical and probably structural credit score dangers in APAC,” the scores agency mentioned.It added that at the same time as tariff-linked provide chain shifts may benefit India in the long term, realignment of world sourcing methods will probably be gradual at greatest. “It’s unlikely that multinational firms will make drastic funding adjustments whereas there’s nonetheless important uncertainty concerning the magnitude of tariffs and whether or not they are going to persist,” Moody’s famous.“As a substitute, firms will probably sluggish or pause ongoing investments whereas they anticipate a gentle state on commerce insurance policies to emerge. Even then, any determination to relocate manufacturing or product sourcing will take years to execute,” it added.Trying forward, Moody’s expects the rate of interest atmosphere to grow to be extra accommodative within the second half of 2025, each globally and throughout the APAC area, in response to a weaker financial outlook.