India to Face Minimal Impact due to Trump’s Tariffs: Report

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India May Escape Major Fallout from Trump’s Trade Tariffs: Report

By TRH News Desk

New Delhi, April 6: India may face minimal impact due to reciprocal tariffs announced by US President Donald Trump, said a report. It added that India could gain from differential tariffs with large Asian exporting nations.

A report in Khaleej Times quoted Goldman Sachs, saying that “the tariffs could increase the total effective tariff on Indian goods by 19.5 per cent”. This has the potential to hut exports worth $15 billion, The cut will amount to “approximately 0.4 per cent of India’s GDP”, said the report.

Issac John wrote in Khaleej Times that a “deeper analysis (of the Indian economy) reveals a more resilient outlook”. John stated in the article that “India’s trade relationship with the US remains robust, with bilateral trade reaching $124 billion in 2024”.

John quoted Motilal Oswal’s estimates, which stated that “India’s exports in the six most vulnerable sectors constitute only 1.1 per cent of GDP. Even under a worst-case scenario, where exports to the US decline by $3.6 billion (0.1 per cent of GDP), the broader economic repercussions would be marginal”.

The report further explained that Oswal’s “assessment is based on a tariff differential of 9.0 per cent and an export elasticity of -0.5”. It added that a “1.0 per cent increase in tariffs could reduce exports by just 0.5 per cent”.

The report mentioned that “Indian exports to the US accounted for $81 billion”. Indian imports were worth $44 billion in 2024. The trade surplus in India’s favour was $37 billion.

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“The US is India’s largest export destination, absorbing 18 per cent of total outbound shipments — a sharp rise from just 6.0 per cent in 2006,” wrote John. He added that the “strong trade foundation” may limit the direct impact of reciprocal tariffs.

The report also stressed that “India’s tariff burden remains significantly lower than that of other key nations”. The US imposed a 26 per cent reciprocal tariffs on India.

The government has said that it will be patiently negotiating a bilateral trade deal with the US. The trade deal is likely by end of the year.

“Indian goods will face a 26 per cent duty — on par with the EU (20 per cent) and Japan (25 per cent) but far below the rates imposed on China (54 per cent), Vietnam (46 per cent), Sri Lanka (44 per cent), and Bangladesh (37 per cent). This discrepancy positions India favourably in the global supply chain,” John wrote in the article.

The report argued that India may “attract trade diversion from higher-tariff competitors”. It quoted Sujan Hajra, chief economist at Anand Rathi Group, saying that “India’s economic resilience could turn this trade headwind into an opportunity”.

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