Trump Tariff Blow to Weigh, Says CEA

According to him, the order of magnitude could be anywhere between 0.3% and 0.5% this year in terms of real GDP impact.

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The country's GDP rose to a five-quarter high of 7.8% during the April-June 2025 quarter. The Reserve Bank of India (RBI) has projected real GDP growth for FY26 at 6.5%.

The CEA, however, said that if the situation remains unchanged, the full impact of the additional 25% tariff will be felt next fiscal. "So the fiscal second and third quarters will be critical, but I hope by then the second 25% (tariff) would have been resolved. If it continues into the next financial year and lasts, that would be a huge challenge both in terms of employment and GDP growth. Difficult to give you precise numbers," he said.

For India, finding other markets for its exports will not be an easy task, with China—which is also facing challenges with exports to the US and has the ability to finance buyers, offer long lead times for payments, and provide product and price discounts—competing for market share in third markets, he said. "In that sense, it does raise the dependence on domestic levers of growth that much more. So that is a formidable task on hand for us," the top economist said.

Higher tariff counterproductive