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Recent U.S. trade policy shifts have jolted Asia, remaking supply chains, diplomacy, and growth forecasts.
Asia’s Mixed Exposure
While China absorbed the initial shock, ripple effects have unsettled export-driven economies across the region
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Vietnam gained as supply chains shifted from China, but rising costs are squeezing margins
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Singapore saw Q3 port activity dip 3.2% as global flows slowed
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Philippines faced weaker U.S. demand for electronics; remittances slipped 1.8%
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South Korea exports to the U.S. dropped 4.5% (H1 2025), hurting steel and electronics
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Thailand & Bangladesh picked up some orders, but gains were offset by currency swings and slower growth
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Countries are benefiting in certain export verticals (apparel, electronics), picking up orders diverted from China, but there are limits: rising input costs, dependency on U.S. demand, and currency fluctuations are introducing vulnerabilities.
India is more exposed than many: large export volumes to the U.S., especially in textiles, jewelry, and seafood; sectors with tighter margins are most at risk. The country finds itself navigating both opportunity and strain as tariffs escalate.
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Over $48B of Indian exports to the U.S. are now at a cost disadvantage due to new tariff structures
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Policy Responses
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India is providing relief for exporters like credit guarantees and support for labor sectors.
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From September 22, GST rates are mostly 5% or 18% and luxury goods at higher rates to boost demand.
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Exporters are encouraged to diversify markets beyond the U.S. to the Middle East, Asia, Africa, and Europe.
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Dialogues are reopening with positive statements from Trump and Modi on trade talks.
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The rhetoric is softer, with both sides open to negotiate exemptions or rollbacks.
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What's New: Data & Development
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GDP Impact: U.S. tariffs could reduce India’s GDP by 0.5–0.6 points in FY2025.
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However, India’s FY2026 growth forecast remains strong at 6.3–6.8% with a “short-lived” impact.
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Export Strain: Apparel outlook cut to Negative; margins may shrink by 200–300 bps.
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Risks & The Uncertainty Premium
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Rating agencies warn prolonged exposure may reduce growth by 1 ppt in FY26-27
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The rupee is fluctuating under pressure; investor sentiment is jittery
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Vietnam, Bangladesh, China are poised to gain India's lost market share
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Imports, especially in textiles, solar, depend on foreign inputs, risking cost shocks
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Outcome of U.S.-India trade talks: Will there be tariff rollbacks? Exemptions for specific sectors?
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How exporters adjust: shifting supplier base, shifting export destinations, or absorbing smaller margins.
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Currency policy & inflation: How will rupee fluctuations affect competitiveness and import input cost.
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Domestic policy support: Are the relief packages sufficient and timely? Will there be tax / GST waivers for the worst-hit sectors?
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Global demand trends: U.S. consumer policy, EU trade policy, supply chain realignment can define the benefit India can gain in alternative markets
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Bottom Line
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The trade wars of 2025 are forcing India to recalibrate: more aggressive trade diplomacy, faster policy support, and an urgent need to diversify both inputs and markets. While the damage is real especially for vulnerable export sectors, there remains resilience in India’s domestic market, some sectors (like renewables), and in its ability to adapt.
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Talent Agility in a Shifting Trade landscape
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When tariffs squeeze exports and supply chains shift overnight, companies need agility not only in trade, but in talent. As a global Employer of Record (EOR), PR GLOlinks enables firms to:
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Diversify operations quickly: Set up teams in alternative markets without the delays of entity setup
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Access global talent pools: Hire specialized talent across borders to strengthen new market entry or manage export diversification
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Mitigate cost pressures: Lower overhead by building distributed teams in cost-competitive regions
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Stay compliant: Navigate local labor laws, payroll, and contracts seamlessly while focusing on business continuity
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Schedule a call with our experts to know more
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