Indian economy likely to impact from Trump proposed tariffs on all countries : Report

India's economy is expected to face only a minor impact from Donald Trump’s proposed tariff increases on all countries. The US presidential candidate has heightened his trade warnings towards India, according to Bloomberg Economics.

If Trump is re-elected in November and implements a 60% tariff on Chinese goods and a 20% tariff on other countries, India’s gross domestic product is projected to be 0.1% lower by 2028. This reduction would be driven by a global trade downturn and India’s relatively weaker competitiveness, according to economists Abhishek Gupta and Eleonora Mavroeidi in a report released Friday.

Trump has pledged to take reciprocal measures against nations like India, criticizing its high tariffs on American products. On Thursday, he referred to India as the “biggest charger” of tariffs, citing India’s import taxes on Harley Davidson Inc., an issue he raised during his first term.

In 2019, Trump revoked India’s developing nation status, which had allowed the country to export many goods to the US duty-free. India responded by raising tariffs on various products. The US remained India's largest trading partner last year, with bilateral trade amounting to about $127 billion.

Despite these trade tensions, Trump has continued to praise Prime Minister Narendra Modi, recently calling him a friend and "the nicest human being."

Bloomberg Economics noted that India could mitigate the effects of Trump’s trade barriers by increasing manufacturing subsidies and lowering average import tariffs. The economists estimated that a combination of a 4% production incentive and a 1 percentage-point reduction in import tariffs could boost GDP by 0.5% above the baseline.

(With inputs from Bloomberg)