18% tariff 'boon' for India? Ex-US treasury official says edge over China may be overstated
India now faces an 18 per cent tariff on goods entering the American market - lower than many of its Asian competitors, including Vietnam and China
- Feb 11, 2026,
- Updated Feb 11, 2026 12:54 PM IST
As Washington signals that India could serve as a manufacturing base for companies looking to diversify away from China, a former US Treasury official has cautioned against reading too much into India's lowered 18 per cent tariff rate.
India now faces an 18 per cent tariff on goods entering the American market - lower than many of its Asian competitors, including Vietnam and China. Policymakers in New Delhi are confident that this relative advantage will give Indian exporters an edge.
But Evan Feigenbaum, a former US Treasury official, argues that the margin may not be as decisive as many assume.
"Unfortunately, the 18 percent tariffs aren't actually so helpful if that's your goal," Feigenbaum said, reacting to US Trade Representative Jamieson Greer's suggestion that India could serve as a stopover for supply chains shifting out of China. "18 percent is a smooth landing for India, because if American tariffs are going to be a fact of life, then relative advantage over competitors is what matters."
"India now has a lower tariff rate than ASEAN countries - most of them are stuck at 19 per cent, with Vietnam at 20 per cent, and with additional penalties for transshipment of Chinese goods-and it's competitively good for Indian exporters. (It is perversely entertaining that 18 percent is now considered an awesomely "low" tariff rate, but this is nonetheless a boon to India.) But while relative tariff rates matter, tariffs aren't the only factor in determining trade and investment decisions."
Feigenbaum said that it is questionable whether a 1 or 2 per cent tariff differential conveys such an overwhelming competitive advantage that it overcomes other factors working in favor of Southeast Asian competitors that are better integrated into regional supply chains and have stronger fundamentals in their favor, such as foreign direct investment, export, and manufacturing hubs.
"The straight line many are drawing from small differentials in tariff rates to the totality of what makes an exporter attractive elides much about Vietnam's comparative advantage and especially what made China so attractive," he said, adding that there is more to the China ecosystem, for example, than just cost.
"And China is itself likely to get a trade deal with Trump that could keep its rate at least within striking distance of the ASEAN and India rates, which would invariably affect the medium-term calculations of manufacturers thinking of relocating."
US President Donald Trump will travel to Beijing during the first week of April for a meeting with Chinese President Xi Jinping, Politico reported on Monday.
On Tuesday, Greer said India could serve as a stopover for supply chains shifting out of China. When asked whether India could be an appropriate place for companies seeking alternatives to China, Greer said: "It can be. We know that many companies already are going in that direction. India can be a way station for that (supply chains). They have a lot of folks there. They have manufacturing capacity."
As Washington signals that India could serve as a manufacturing base for companies looking to diversify away from China, a former US Treasury official has cautioned against reading too much into India's lowered 18 per cent tariff rate.
India now faces an 18 per cent tariff on goods entering the American market - lower than many of its Asian competitors, including Vietnam and China. Policymakers in New Delhi are confident that this relative advantage will give Indian exporters an edge.
But Evan Feigenbaum, a former US Treasury official, argues that the margin may not be as decisive as many assume.
"Unfortunately, the 18 percent tariffs aren't actually so helpful if that's your goal," Feigenbaum said, reacting to US Trade Representative Jamieson Greer's suggestion that India could serve as a stopover for supply chains shifting out of China. "18 percent is a smooth landing for India, because if American tariffs are going to be a fact of life, then relative advantage over competitors is what matters."
"India now has a lower tariff rate than ASEAN countries - most of them are stuck at 19 per cent, with Vietnam at 20 per cent, and with additional penalties for transshipment of Chinese goods-and it's competitively good for Indian exporters. (It is perversely entertaining that 18 percent is now considered an awesomely "low" tariff rate, but this is nonetheless a boon to India.) But while relative tariff rates matter, tariffs aren't the only factor in determining trade and investment decisions."
Feigenbaum said that it is questionable whether a 1 or 2 per cent tariff differential conveys such an overwhelming competitive advantage that it overcomes other factors working in favor of Southeast Asian competitors that are better integrated into regional supply chains and have stronger fundamentals in their favor, such as foreign direct investment, export, and manufacturing hubs.
"The straight line many are drawing from small differentials in tariff rates to the totality of what makes an exporter attractive elides much about Vietnam's comparative advantage and especially what made China so attractive," he said, adding that there is more to the China ecosystem, for example, than just cost.
"And China is itself likely to get a trade deal with Trump that could keep its rate at least within striking distance of the ASEAN and India rates, which would invariably affect the medium-term calculations of manufacturers thinking of relocating."
US President Donald Trump will travel to Beijing during the first week of April for a meeting with Chinese President Xi Jinping, Politico reported on Monday.
On Tuesday, Greer said India could serve as a stopover for supply chains shifting out of China. When asked whether India could be an appropriate place for companies seeking alternatives to China, Greer said: "It can be. We know that many companies already are going in that direction. India can be a way station for that (supply chains). They have a lot of folks there. They have manufacturing capacity."