Higher tariffs to impact US more than India

The impact of 25 per cent tariff on Indian exports will be worse for the US compared to India as America may face a lower GDP, higher inflation and a weaker dollar, SBI Research said on Friday, calling implementing the tariff a "bad business decision".

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On July 30, US President Donald Trump announced the imposition of a 25 per cent tariff on all goods coming from India, plus an unspecified penalty for buying Russian crude oil and military equipment. While August 1 was the tariff deadline, the new levies will come into effect from August 7.

Stating that the imposition of high tariffs on India with a penalty is a "bad business decision" by the US, but the "mysterious forces" of the global supply chain should automatically adjust and cushion the impact of high tariffs. "Surprisingly, the US GDP, inflation and currency face a greater risk of downgrades compared to India... The economic implications for the current trade stalemate, not surprisingly, the impact on the US will be worse compared to India with a lower GDP and higher inflation and a weaker dollar," SBI Research said in a report.