India less exposed to potential US tariff rises: Fitch Ratings

Fitch Ratings: Lower export orientation than many other Asian economies makes India less likely to be affected by the prospective US tariff hikes on imports, Fitch Ratings said in a report on Monday. This is because of the concern that higher trade barriers will result due to the expected US elections.

Fitch said increased tariffs could present a lot of headwinds for issuers across the credit sectors in the Asia-Pacific region. The agency noted that a slowdown in global growth could further weigh on Asia's macroeconomic prospects if the economic outlook of China is disproportionately affected.

Countries with economies that are highly dependent on exports, especially those that have significant trade links with the US, will most likely be affected by GDP shocks. Vietnam is the most vulnerable country among other countries; Taiwan and Thailand have high exposure to the fluctuations of the US market, while Hong Kong and Singapore are exposed, whereas Malaysia and South Korea are not.

Fitch said that it projected that a significant hike in the US tariffs would send global growth into a notable recession. The report mapped the impact when the US raised 60 percent tariffs on imports from China and 10 percent on all other goods while greatly affecting the economy globally.

The report indicates an indecisiveness on the exact tariff policies that a prospective Republican government will impose, postulating that this is amply indicated by the party's platform, which already contains basic tariffs on imported foreign-made goods and the introduction of the Trump Reciprocal Trade Act. The act gives authority to the president to increase tariffs on countries where higher tariffs are implemented on imports received by the US compared to exports.

Fitch also noted that if Donald Trump is going to be the next president in 2024, look for big policy changes, though they did not review the policy stands of his opponent, Vice President Kamala Harris. They do expect that a Harris administration would tend to carry much of the status quo under President Joe Biden .

As recently reported, Trump said India is the country that charges the highest import duty in the world among the big nations and promised to impose a reciprocal tax if he wins.