India Least Affected by US Tariffs Due to Strong Domestic Demand: Morgan Stanley

A recent Morgan Stanley report highlights that India, alongside Japan, is among the least exposed to US trade tariffs due to strong domestic demand and relatively lower goods export-to-GDP ratios.

The US has implemented significant tariffs on various imports, including a 25% tariff on auto imports, which particularly impacts Japan and South Korea due to their high auto export volumes to the US. However, India’s internal demand buffers mitigate the effects of these tariffs, shielding its economy from substantial growth disruptions.

The report also points out that potential sectoral tariffs in areas like energy, pharmaceuticals, and semiconductors could influence many Asian economies.

For Japan and Korea, the US’s autos deficit, mainly driven by vehicle and auto part imports, could lead to a notable impact on GDP growth if tariffs remain long-term. Despite these challenges, the report suggests that India’s trade orientation makes it more resilient in comparison to other economies reliant on exports.