How will Donald Trump's tariffs impact the Indian economy? Experts weigh in

A former US trade official said on Wednesday that President Donald Trump's announcement of additional tariffs will impact most of India's exports to the United States. Senior Vice President of the Asia Society Policy Institute (ASPI) and former Deputy US Trade Representative Wendy Cutler warned that the India-US dispute is escalating and neither side can afford to be at odds with the other.

"Regrettably, the US-India dispute is escalating, with the President now threatening an additional 25 per cent tariff. This will essentially cut off most Indian exports to the US," Cutler was quoted as saying by AFP.

She said that China will likely benefit from the US-India trade dispute.

"Beijing is most probably welcoming these developments and may take modest steps now to improve its relations with Delhi. It's time for US and Indian officials to try to work out their differences in private," Cutler said in a statement.

Bringing the total tariffs on Indian exports to 50 per cent, Donald Trump today imposed an additional tariff of 25 per cent, citing New Delhi's continual purchase of Russian oil.

India called the US move "unfair, unjustified, and unreasonable".

Meanwhile, Dr Ranjeet Mehta, CEO and Secretary General of non-profit PHDCCI, told ANI that the tariff's impact on the Indian economy would be negligible.

"The US has imposed an additional 25% tariff on India. We are concerned about it and quite disappointed. However, its impact on the overall Indian economy is very negligible. Today, PHDCCI has released a report in which the 25% tariff imposed earlier was analysed, and our export to the US in 2024-25 is about 88 billion dollars. So if we look at the impact of this tariff, we have analysed an impact of about 1.87%, which is about 8.11 billion dollars. But if we look at the impact of this 25% on the overall economy, it is 0.19 per cent. The additional 25% may have an impact of about 0.38% on the overall economy," he said.

He said that the Indian economy is resilient and robust.

Dr Manoranjan Sharma, Chief Economist, Infomerics Ratings, said several sectors will be hit due to the tariffs.

"This will severely hit sectors such as drugs and pharmaceuticals, textiles, electricals and electronics, gems and jewellery. So this is certainly a reason for us in India to be concerned, but no reason for us to be alarmed. It is essential to remember that India, unlike China, is largely a domestically driven economy...We have weathered many storms in the past, like the global financial crisis of October 2008 or even the COVID-19 pandemic. So we are confident this will cause some hits but will be able to weather this shock confidently," he added.