Trump Tariffs May Cut India's GDP by 30 bps: Experts

Trump on Wednesday announced a 25 percent tariff on Indian goods and penalty on India for Russian imports

- STATESMAN NEWS SERVICE

United States (US) President Donald Trump announced a 25 percent tariff on Indian goods and penalty on India for Russian imports. Barclays said the move could dent India's GDP growth by 30 basis points in the current fiscal. But the higher duty is unlikely to significantly affect India's domestic demand-driven economy, it added.

As per its estimate, if the 25 percent tariff is implemented from 1 August, the effective average US import tariff on Indian goods will rise to 20.6 percent in trade-weighted terms.

"We do not see this 25 percent tariff threat impacting GDP growth meaningfully, pegging the likely impact at 30 bp. We expect final tariffs on India to settle lower than the announced 25 percent, as India and the US continue with trade deal talks," it said.

Analysts expect the tariffs alone could result in a 20-50 basis point hit to India's gross domestic product.

Bloomberg Economics have also projected that a 26 percent reciprocal levy could cut US-bound shipments by 30 percent. The overall impact of Trump's policies could be more severe depending on the Russian "penalty" that is eventually levied on Indian exports.