Donald Trump’s tariff impact on commerce: India may benefit from lower US duties; Moody’s sees manufacturing boost amid APAC disruption

India may face fewer tariff headwinds from the US than lots of its Asia-Pacific friends, serving to the nation entice higher funding flows and strengthen its place as a world manufacturing hub, Moody’s Ratings mentioned on Thursday.The scores company, in its outlook on APAC sovereigns, famous that a number of export-heavy economies throughout the area had been hit by steep US tariff hikes in April 2025. Countries like Vietnam and Cambodia—earlier beneficiaries of a provide chain pivot out of China—now danger dropping their price benefit amid rising commerce frictions, PTI reported.“In contrast to countries like Cambodia and Vietnam, India has the potential to emerge as a beneficiary of a tariff-driven shift in investment and trade flows. India may be subject to lower tariffs than many in APAC,” Moody’s mentioned, pointing to a possible upside for the Indian financial system.The company famous that India’s current free commerce settlement (FTA) with the UK and ongoing negotiations with the EU may additional help its push to turn into a most popular different to China in international provide chains. However, it cautioned that Washington’s push to reshore choose industries may restrict the scope of beneficial properties India can seize.India is at present negotiating a mini commerce cope with the US, as a 90-day suspension of a 26% reciprocal tariff on Indian items expires on July 9. While the US has retained its 10% baseline tariff, India is urgent for full exemption from the extra duties.The talks are at a essential stage, with New Delhi looking for extra entry for its labour-intensive exports, and the US pushing for concessions on farm produce. Officials from either side are aiming to shut negotiations earlier than the tariff suspension deadline.Moody’s warned that persistent commerce coverage ambiguity is hurting funding choices and weighing on long-term financial planning throughout the area. “Uncertainty about trade policy and a potential overhaul of global trade have raised cyclical and possibly structural credit risks in APAC,” the scores agency mentioned.It added that whilst tariff-linked provide chain shifts may benefit India in the long term, realignment of worldwide sourcing methods will likely be gradual at finest. “It is unlikely that multinational companies will make drastic investment changes while there is still significant uncertainty about the magnitude of tariffs and whether they will persist,” Moody’s famous.“Instead, companies will likely slow or pause ongoing investments while they wait for a steady state on trade policies to emerge. Even then, any decision to relocate manufacturing or product sourcing will take years to execute,” it added.Looking forward, Moody’s expects the rate of interest surroundings to turn into extra accommodative within the second half of 2025, each globally and throughout the APAC area, in response to a weaker financial outlook.