US Slaps 50% Tariff On Indian Imports; Economists Warn Of GDP Hit — Details Inside
US President Donald Trump has imposed an additional 25 per cent tariff on imports from India, bringing the total tariff burden on Indian goods entering the American market to 50 per cent. The move, announced via an executive order on Wednesday, has sent shockwaves through India’s export community and prompted warnings from economists about a potential dent in GDP growth for FY26.
Sonal Badhan, Economics Specialist at Bank of Baroda, noted that the initial impact assessment of US tariffs estimated a 0.2 per cent drag on India’s GDP growth. With the new tariff hike, the revised estimate could be as high as 0.4 per cent, according to an ANI report.
“We had initially priced in approx. 0.2 per cent impact (on GDP growth) of 25-26 per cent tariffs imposed by the US on imports from India. The additional 25 per cent hike will come into effect after 21 days. During this time or in the coming months, there is a likelihood that lower rates may be negotiated,” she said.
She added that garments, precious stones, electronics, pharmaceuticals, auto components, and MSMEs would bear the brunt of the increased costs. “There appears to be downside risk to our growth forecast of 6.4-6.6 per cent if lower rates are not negotiated,” she warned.
Exporters Brace For Fallout
Exporters are now staring at a sharp drop in competitiveness in one of their biggest markets. Ajay Bagga, a banking and markets expert, didn’t mince words, claims the report. “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 explained that with the holiday export season already in motion, the impact would be immediate. “If $1 billion worth of textile exports are halted, it directly impacts around 100,000 workers,” he noted.
Industry Voices Criticise Move
Agneshwar Sen, Trade Policy Leader at EY India, criticised the action as politically motivated. “Political differences are best resolved through mutual dialogue and established forums, not through such measures. I remain hopeful that the Government of India will continue to engage and seek a balanced resolution with the US,” he said.
Meanwhile, Federation of Indian Export Organisations (FIEO) President S C Ralhan estimated that over half of India’s shipments to the US are now under threat. “Nearly 55 per cent of our shipments to the US market are directly affected. The 50 per cent tariff puts Indian exporters at a 30-35 per cent competitive disadvantage,” he said.
“For MSMEs, absorbing this cost is not viable. This could force many to lose long-standing clients,” Ralhan added.
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India To Stick To Its Oil Strategy
The executive order cited India’s continued import of Russian oil as the trigger for the tariff hike. “I find that the Government of India is currently directly or indirectly importing Russian Federation oil. Accordingly... articles of India imported into the customs territory of the United States shall be subject to an additional ad valorem rate of duty of 25 per cent,” the order stated.
While most Indian exports are now affected, a few exceptions listed under Annex II of Executive Order 14257, such as certain mineral substances, metallurgical ores, industrial chemicals, and pharma precursors, remain exempt.
India, for its part, has indicated it will continue to purchase oil based on its strategic needs.
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