India may lose US exports worth $5B to Vietnam
What's the story
India risks losing up to $5 billion in exports to the US market if it doesn't reach a lower tariff trade deal with the United States, according to an analysis by Moneycontrol. In 2023, India exported nearly $76 billion worth of goods to the US, out of which about $5.4 billion directly overlaps with Vietnam's export basket.
Trade dynamics
India and Vietnam compete in 161 common products
India and Vietnam currently export 161 common products worth more than $5 million each to the US, with India's shipments exceeding those of Vietnam. The total trade value of these items is $22 billion. However, in direct competition where volumes are high and prices are closely matched, the potential loss for India shrinks further to $353 million.
Export risks
Frozen shrimp biggest threat to Indian exports
The biggest threat to Indian exports comes from the frozen shrimp and prawn shipments. In 2023, India exported $1.81 billion worth of frozen shrimp to the US, while Vietnam sent only $290 million. If tariffs favor Vietnam, India's share could drop to around $224 million, causing a potential loss of $1.6 billion in this category alone.
Market challenges
Other vulnerable segments
Other vulnerable segments in Indian exports include kitchen and toilet linen (possible loss of $280 million) and jewelry (loss of $231 million). These categories are particularly at risk because both nations target similar buyer profiles in the US market. The potential losses highlight the need for India to secure a preferential trade deal with Washington to protect its key export sectors.
Trade agreement
Trump announces trade deal with Vietnam
On July 2, US President Donald Trump announced a bilateral trade deal with Vietnam, reducing export tariffs to 20% before the July 9 deadline. The new US policy imposes a 40% levy on trans-shipped goods. While Vietnam's initial tariff was set at 46%, it has now been reversed due to this agreement. India, however, still faces a possible 26% tariff unless it finalizes a preferential trade agreement with America.