“The shift to low-tariff countries may happen to absorb the impact of high production costs, which could stoke inflation and reduce demand in the US,” the official added. Industry bodies have begun flagging the risks to policymakers, stressing that India can’t afford to lose ground just as it’s emerging as a credible alternative to China and Vietnam. The Indian Cellular and Electronics Association (ICEA) pointed out that several developing economies are now offering more attractive trade terms. “Brazil, Turkey, Saudi Arabia, the UAE—all have secured far lower tariff rates compared to India, most at 10%. The Philippines sits at 17%,” the association noted. Among these, Saudi Arabia and the UAE are seen as short-term threats due to their ambitious Special Economic Zones, leaner manufacturing setups, and potential labour cost benefits. Even Brazil, traditionally seen as a tough trade partner, is gaining traction. “Its favourable treatment under recent US tariff actions adds strategic ambiguity and must be closely tracked,” ICEA said.