Tariffs push India toward China

I just read Dr. Selim Raihan’s piece. The real risk in a 50% tariff shock is a nudge toward China/RCEP - the opposite of friendshoring. https://www.tbsnews.net/features/panorama/will-us-tariffs-push-india-closer-china-1207586?utm%5Fsource=chatgpt.com

How it’s built: 25% “reciprocal” plus 25% “penalty” linked to Russian oil, rolled out in two waves about three weeks apart.

History shows tariffs pass through almost fully to U.S. import prices. Buyers pay more. Orders shift to Vietnam and Bangladesh. The hardest hit at home are MSME heavy clusters like Tirupur apparel, Surat diamonds, and Morbi ceramics. A reasonable baseline is a 0.5 to 1 percentage point drag on India’s GDP.

That is a big economy wide distortion for modest leverage.

Strategy check. This piles up deadweight loss while weakening alignment. Tony Abbott flags Quad risk. Chatham House expects ties to endure but under strain. John Bolton says punishing Delhi while signaling leniency to Beijing is an unforced error.

We are already seeing a tactical thaw with Beijing. Trade follows incentives. Trust follows trade.

For operators, plan for higher landed cost variance and tariff whiplash in your network design. Revisit dual sourcing across ASEAN. Watch rules of origin and longer lead times.

For policy teams, the U.S. is about 18% of India’s goods exports. Untangling that will be messy. When trade turns into a cudgel, digital and tech cooperation take a trust hit too.

What would change my mind: clear carve outs for pharma APIs, semiconductor tooling, and critical minerals. A glide path with measurable milestones. A public model of sector elasticities and economy wide effects.

Short of that, this looks net negative on both economics and alliance math. I’m happy to be wrong, but the incentives point the other way. Will we see carve outs or a security list soon?