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Trump tariffs may hit India GDP growth, put industry at wide disadvantage: Experts
Economist say that the total impact of tariffs on Indian GDP can range between 0.2-0.4 per cent.
In a major decision by the Trump administration, US President Donald Trump imposed an additional 25 per cent tariff on imports from India, making the total tariff against India 50 per cent. In light of this, economists feel that the move can impact India’s GDP growth in EY26 by 0.4 per cent.
Sonal Badhan, Economics Specialist at Bank of Baroda, told ANI that initially, the expected impact of Trump’s tariffs was at 0.2 per cent impact with a 25-26 per cent tariff imposed on India.
"There appears to be downside risk to our growth forecast of 6.4-6.6 per cent if lower rates are not negotiated," she said, talking about the consequences of tariffs on growth.
Further, she said that depending on the terms of the final trade agreement, the total impact of tariffs on Indian GDP can range between 0.2-0.4 per cent.
Sectors including garments, precious stones, pharmaceuticals, auto parts, electronics, and MSMEs are most likely to be affected by it.
Also read: Indian stock market opens in red after Donald Trump's 50% tariffs on India
Meanwhile, this move has also sparked concerns among the Indian trade exports, as the new tariff will make Indian exports more expensive in the American market.
Announced by the Trump administration on Wednesday, this move was taken in response to India continuing its oil imports from Russia.
The executive order by Trump stated, "I find that the Government of India is currently directly or indirectly importing Russian Federation oil.” Based on this, it said that articles from India imported into the customs territory of the US will be subject to an additional 25 per cent duty.
Ajay Bagga, a banking and market expert, told ANI that the steep tariff is a major blow to India.
"India is now hit with 50 per cent tariffs, but frankly, once it crossed 25 per cent, it didn't matter. It could be 1,000 per cent or 5,000 per cent; there's no trade possible anymore," he said.
Bagga also pointed out that with shipments already prepared, the move hits exporters hard. "If USD 1 billion worth of textile exports are halted, it directly impacts around 100,000 workers," he said.
Experts also called the additional tariff unnecessary and suggested mutual dialogue to resolve political differences. "I remain hopeful that the Government of India will continue to engage and seek a balanced resolution with the US," Agneshwar Sen, Trade Policy Leader at EY India, said.
The Federation of Indian Export Organisations (FIEO) also expressed concerns at the situation with President, SC Ralhan, saying that, "nearly 55 per cent of our shipments to the US market are directly affected.” He also stated that the imposed tariffs will put Indian exporters at a competitive disadvantage by 30-35 per cent.
While the order imposes tariffs on most Indian imports, some items, including certain mineral substances, fuels, industrial chemicals, metallurgical ores, and pharmaceutical precursors, have been excluded.
