Donald Trump's tariff will impact the US as well. Here's how

Donald Trump's tariff on India will impact the US economy as well, said a report by the State Bank of India. The new tariffs will impact the GDP of the United States by 40-50 basis points and increase inflationary pressure. "We believe that U.S. tariffs are likely to affect U.S. GDP by 40-50 bps along with higher input cost inflation," said the SBI report.

Donald Trump recently imposed tariffs on India for buying Russian oil and weapons. The increased duty took effect today.

The SBI report said thatsigns of renewed inflationary pressure have already started emerging in the US, mainly due to the pass-through effects of the recent tariffs and a weaker dollar.

The SBI report said that tariffs will also impact import-sensitive sectors likeelectronics, automobiles, and consumer durables, in the United States.

Due to supply-side factors arising from higher tariffs, theinflation in the US is now expected to remain above the 2 percent target through 2026.

Donald Trump's administration has imposed tariffs on Indian exports worth $45 billion. Sectors liketextiles, gems, and jewellery are expected to be hit by the tariffs. However, the administration spared sectors likepharmaceuticals, smartphones, and steel.

The report, however, said that if the 50 per cent tariff is not removed, India's trade surplus might soon turn into a trade deficit.

"However, we believe trade negotiations will restore confidence and improve exports to the US," the report added.

The report said that the tariff on Indian goods is now 50 per cent. However, duties on Chinese goods are 30 percent,Vietnamese goods are at 20 percent, Indonesian exports are at 19 percent, and Japanese products are at 15 percent.

Since Indian tariffs are higher, it has lost cost benefits and will lose out on business to its Asian rivals.