India would be relatively unaffected in case US levies higher tariffs on imports: Fitch

16 Oct 2024 Evaluate

Fitch Ratings in its latest report has said that India, which is less export-oriented than many other Asian economies, would be relatively unaffected in case the US levies higher tariffs on imports. It said higher trade barriers in the wake of the US elections could pose additional challenges for issuers across multiple credit sectors in Asia-Pacific (APAC). Also, weaker growth globally would weigh on macroeconomic prospects in Asia in the event of sharp US tariff increases, especially if China's economic prospects are affected disproportionately.

The report said that the high share of exports going to the US, coupled with high dependence on exports for growth within the region, means that any hit to exports to the US would have negative repercussions for GDP in many Asian economies, albeit to varying degrees. Fitch views Vietnam as the most vulnerable on this front, but Taiwan, Thailand, Hong Kong, Singapore, Malaysia and South Korea would also have significant exposure. A sharp increase in US tariffs could therefore pose a significant challenge for Asian exporters.

It further said Hong Kong, Taiwan, Singapore and Malaysia also stand out as economies that would be significantly hit. India, which is less export-oriented than many other Asian economies, would be relatively unaffected. Fitch has conducted an analysis of the potential effects on global growth of higher US tariffs. It estimates that there would be a significant hit to global growth prospects under an illustrative scenario in which the US imposes 60 per cent tariffs on all imported goods from China and a 10 per cent across-the-board tariff on all goods imported from the rest of the world.