EXCLUSIVE: US–India Trade Deal To 'Tilt The Spreadsheet' As Firms Rethink China Exposure, Says Strategist - Boeing (NYSE:BA), iShares MSCI India ETF (BATS:INDA)

Core Insights - The new U.S.-India trade deal represents a significant shift in bilateral relations, with India expected to play a larger role in U.S. supply chains, although it will not lead to an immediate overhaul [1][4] - The agreement is seen as a gradual shift rather than a sudden change, influencing how U.S. multinationals evaluate costs and risks associated with sourcing alternatives to China [2][7] Trade Dynamics - U.S. imports from India reached $95.4 billion between January and November 2025, marking a 19.2% increase from the same period in 2024, while U.S. exports to India rose by 9.6% [3] - Under the new deal, U.S. tariffs on Indian goods will decrease from 50% to 18%, contingent upon India's commitment to halt Russian oil purchases [4] - India plans to import at least $500 billion worth of U.S. goods over the next five years, with significant demand expected for energy, aircraft, and ICT products [5] Tariff Implications - India will reduce tariffs on U.S. industrial and agricultural goods, while the U.S. will reciprocate by removing tariffs on pharmaceuticals, gems, and aircraft parts [6] - The tariff cuts are expected to reinforce existing trends of U.S. companies reducing reliance on China, with India being a viable alternative [7] Sourcing Decisions - Multinational companies' sourcing decisions are influenced by long-term contracts and compliance checks, which can take years to adjust [8] - The shift in sourcing will occur in stages, starting with pilot sourcing and contract renegotiations, followed by capacity expansion and supplier consolidation [8] Reliability and Costs - The move away from Russian oil by India is seen as reducing geopolitical ambiguity, which is increasingly important for U.S. investors [11] - Higher energy prices may pressure margins for Indian manufacturers, but reliability is becoming a premium factor for U.S. multinationals, who prefer stable partners over the cheapest options [12]