Global Market Turmoil As Trump's Tariffs Hit Hard, India Stands Strong

Recently, U.S. President Donald Trump announced new import tariffs aimed at reducing the country’s USD 1.2 trillion trade deficit. The move, described as reciprocal tariffs, targets foreign exporters by imposing higher costs on their goods. This strategy is designed to curb the trade imbalance, encouraging American companies to buy domestically.

The new tariffs affect multiple countries differently. While the U.S. has set a base tariff of 10 per cent, India faces a 26 per cent tariff. In contrast, China’s goods are taxed at 34 per cent, Vietnam at 46 per cent, Bangladesh at 37 per cent, Indonesia at 20 per cent, and Japan at 25 per cent. This disparity puts India in a relatively favorable position compared to its competitors.

India’s Export Landscape: Challenges and Opportunities

India’s exports to the U.S. were valued at approximately USD 395.63 million from April to February 2025, making it one of the top destinations for Indian goods. Sectors like textiles, IT electronics, agriculture products, fish, and rice could be significantly impacted by the new tariffs.

However, there’s a silver lining. Since the tariffs on countries like Vietnam and Bangladesh are higher, Indian goods might become more competitive. For example, Indian textiles, which face a 26 per cent tariff, could be cheaper than Vietnamese products taxed at 46 per cent and Bangladeshi products at 37 per cent.

Economic Impact on India: A Mixed Bag

The broader economic impact on India is expected to be moderate, with an estimated 1.9 per cent decline due to the tariffs. This is relatively minor considering India’s 2.4 per cent contribution to the global economy. When translated to household impact, it’s around Rs 2,396 per family.

India’s strong domestic demand acts as a buffer, supporting continued economic growth projected at 6.5–7.5 per cent. Additionally, ongoing bilateral talks between India and the U.S. could lead to tariff relief, providing a further boost to India’s export sector.