As the US imposes tariffs on China, India is poised to reap the benefits of a surge in manufacturing investments. With women making up 70% of FoxConn’s workforce, life-changing wages are attracting poverty-lifting jobs.
India’s Manufacturing Industry Seeks to Profit from Trump’s Tariffs on China
The United States and India have a rapidly growing trade relationship, with bilateral trade reaching $142 billion in 2020.
The US is one of India's largest trading partners, while India is the US' 10th largest trading partner.
Key sectors driving growth include 'IT', pharmaceuticals, and agriculture.
To further enhance trade, both countries have implemented various initiatives, such as the US-India Trade Policy Forum.
According to a report by the US Chamber of Commerce, increasing two-way trade could create over 600,000 American jobs.
The women knocking on doors of the employment agencies that dot the roads of this industrial town are a sign of how India has profited from U.S. tensions with China. In the southern state of Tamil Nadu, many seek work at one company: FoxConn, which manufactures iPhones for Apple. Women make up some 70% of the Sriperumbudur plant’s workforce.
Twenty-one-year-old Keerthana, who only has one name, was sleepily waiting for a bus to the FoxConn dormitory housing women employees. She’d arrived in the morning on the overnight bus from her hometown. An agency immediately offered her a job at FoxConn. She said she wasn’t sure what job she’d be assigned, but she was told she’d earn $170 a month, double her previous wages in a garment factory. ‘I’ll send the money to my father,’ she beamed. ‘It will really help us.‘
Such wages are life-changing for many Indian women, and former Indian government economic adviser Arvind Subramanian says, ‘I am unambiguously in favor of manufacturing. Because you get many, many more women getting jobs.’ Getting more women into poverty-lifting work is a key reason why India seeks to attract more labor-intensive manufacturing.
More than 40% of women who work in India’s factories do so in Tamil Nadu, although the state is home to only 6% of India’s 1.4 billion people. Now India hopes it will have a chance to lure more manufacturing to its shores amid deteriorating U.S.-China relations and as the Trump administration’s tariff policies make it more expensive to do business in China.
President Trump’s China tariff policies are a key obstacle to India’s hopes of attracting more manufacturing. Indian analysts say he’s been softer than expected on China, where he imposed 20% tariffs — after campaigning on imposing up to 60%. ‘We haven’t seen Mr. Trump as being as tough as he was expected to be,’ says Suhasini Haidar, diplomatic editor of The Hindu.
In 2018, President Donald Trump initiated a trade war with China by imposing tariffs on Chinese goods.
The initial tariffs targeted $50 billion worth of Chinese imports, focusing on technology and industrial products.
This move was in response to China's alleged theft of intellectual property and unfair trade practices.
Subsequent rounds of tariffs increased the total value to over $360 billion.
China retaliated with its own tariffs on US exports.
The trade war had significant impacts on global markets, leading to economic losses for both countries.
Indian officials hoped the U.S. would get so tough on China that eventually companies would be forced to move to a country like India. That promise has not played out so far. Ashutosh Varshney, director of the Saxena Center for Contemporary South Asia at Brown University, says Trump’s relatively soft approach toward China may be due to ‘Elon Musk‘s rising profile in the Trump power structure.’ Musk’s business interests are entrenched in China.
Then there are Trump’s grievances with India over its trade surplus with the U.S., its largest trading partner, which was $45 billion last year. India’s tariffs range from 45% on vegetable oils to 150% on alcoholic drinks and 100% on coffee. During his State of the Union address, ‘reciprocal tariffs on India and other countries would begin on April 2’ he said. India may lose up to $7 billion in trade with the U.S. if those tariffs are applied.
However, a Tamil Nadu government representative tells NPR he believes companies will continue shifting to India because of other factors — including a desire to diversify from China and to base themselves in a large consumer market. He spoke on condition of anonymity because the issue of tariffs is politically sensitive in India. But, he said, ‘what hurts pipeline investment more than bad policy is uncertainty,’ referring to weeks of Trump’s announcements on how, and when, tariffs would be imposed.
The ways in which India might be affected are no concern for this Trump administration. ‘American companies making more investments abroad is not what Mr. Trump wants’ says Varshney. ‘American companies making more investments in America and foreign companies making investments in America is what he wants.‘
The Trump administration implemented several key policies, including tax reforms, deregulation efforts, and immigration changes.
The Tax Cuts and Jobs Act (2017) reduced corporate and individual tax rates, while the Dodd-Frank financial reform law was rolled back to ease regulatory burdens on banks.
Immigration policies included a travel ban targeting predominantly Muslim countries and increased funding for border security.
Additionally, the administration withdrew from several international agreements, including the Paris Climate Accord and the Trans-Pacific Partnership.
