Good if it holds...that would be a lower tariff than any major ASEAN state (19%), Bangladesh (20%), Vietnam (20%) or Pakistan (19%). Major competitive advantage for exporters of labour-intensive sectors like textiles, leather goods etc. Businesses in Pakistan in particular cannot be happy about this...they were already fuming at the EU FTA which saw their competitive advantage evaporate in a big way. Now the US market too.
ASEAN have some decent market caps and capital stocks for some attrition (from India) to there for sure. Vietnam is in sweet spot of 400 billion market cap. Indonesia is at 900 billion etc.
Bangladesh and especially Pakistan are much less relevant in this hypothetical (Indian tariff level continuing at 50% for a year or longer etc, on those things that are not exempted to begin with). Their market caps are tiny, their capital stock is low. It would take them many years to try adjust to that to absorb (compared to more capital dense developing peers)....i.e do a whole lot of things they are already not doing for this long (capital market reforms and so on). BD has some internal capex ratio that is (supposedly) pretty high and similar to India's....Pakistan its literal single digit ratio or in the low teens. They could tariff India way higher than 50% and things still wouldn't shift there appreciably....i.e something else is major chokepoint further up the process/system at hand.
Attracting + organising + retaining capital (and then producing it internally over time to move up the value addition %'s locally) is close to be all end all stuff for developing countries best model to prosperity.
In any case the main effect trump tariffs had was exactly capital market oriented in the end (investor sentiment etc) compared to the trade numbers themselves
The affected trade (longer term, and past the attrition transfer to say ASEAN) would likely have been re-routed to some degree through UAE, HK and others even EU (with its FTA kicking in especially) and ASEAN depending on least route of resistance vs investment transfer costs+time+inelasticities etc...till Trump got around to try whack that too but doubtful if he would prioritise that given the carveouts he already had for much of Indian stuff even with the 50% t-regime.
Stability signalled there (capital upstream to production and trade etc) now, there will be shifts back to India along with expansions....with the basic X - Y difference in tariff rate between China and India for example on top in the sectors India looking to onshore more.
What's more interesting is that it seems we'll have a major hand in refining the type of sour crude (which most refineries elsewhere in the world can't handle) that just got unlocked in Venezuela. It'll need some investment though. US drilling & Indian refining could make a lot of money for both as it would bring a huge new source of crude online. But that could be bad news for both Russia & the MidEast though.
Sure. We will see how it goes. There is a ton of investment that needs to be done in Venezuela (given what has atrophied in basic crude production there) for some period of time before it becomes comprehensively online etc.
Indian refining capacity is some part of Canada also looking to export its sour crude through the recent pipeline+terminal investments and import the refined product back..... compared to opportunity costs of investing into the refining itself.
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