India stands to lose $5 billion of exports to Vietnam in no US trade deal scenario

The total US trade in these 161 items is valued at $22 billion, Vietnam could realistically pose a competitive threat in just $5.4 billion worth of trade. India risks losing up to $5 billion in exports to Vietnam if it fails to strike a trade deal at a lower tariff with the United States, according to a Moneycontrol analysis. Of the nearly $76 billion in goods that India exported to the US in 2023, only $5.4 billion overlaps significantly with Vietnam’s export basket, suggesting limited exposure even in a worst-case scenario. India and Vietnam currently export 161 common products worth over $5 million each to the US where India’s shipments surpass those of Vietnam. For products where both countries directly compete – with significant volumes and close price sensitivities – the potential loss for India narrows further to just $353 million.

The largest threat to Indian exports comes from frozen shrimp and prawn shipments. In 2023, India exported $1.81 billion worth of frozen shrimp to the US, while Vietnam sent $290 million. If tariffs tilt in Vietnam’s favor, India’s share could fall to just $224 million, resulting in a potential loss of $1.6 billion in this category alone. Other vulnerable segments include kitchen and toilet linen (potential loss of $280 million) and jewelry (loss of $231 million), where both countries cater to similar buyer profiles in the US. On July 2, US President Trump had announced a bilateral trade deal with Vietnam, slashing export tariffs to 20% ahead of the July 9 deadline after which reciprocal tariffs under new US trade regime are expected to come into force. Under the new US policy, trans-shipped goods face a 40% levy, while Vietnam was initially slated to face a 46% tariff, now reversed due to the deal. India, however, still faces the prospect of a 26% tariff, unless it finalises a preferential trade deal with Washington. “It is my Great Honor to announce that I have just made a Trade Deal with the Socialist Republic of Vietnam,” Trump stated on his social media platform. At the time of publishing, India had not yet signed any new trade deal with the United States, potentially putting key export sectors at a competitive disadvantage.

Source : https://www.moneycontrol.com/news/business/economy/india-stands-to-lose-5-billion-of-exports-to-vietnam-in-no-us-trade-deal-scenario-13238264.html