India’s economy is expected to face only a minimal impact from Donald Trump’s proposed tariffs if he is re-elected in November. According to Bloomberg Economics, India’s Gross Domestic Product (GDP) could be 0.1% lower by 2028 if Trump follows through with plans to impose a 60% tariff on Chinese goods and 20% tariffs on other countries, including India. The slight decline in GDP would be attributed to the overall slump in global trade caused by these tariffs and India’s relatively weaker competitiveness compared to its peers.
Trump’s Trade Policies and India’s Economy
Trump has made it clear that he plans to take reciprocal actions against countries that impose high tariffs on American goods. India has been one of his key targets, with Trump accusing the South Asian nation of being the “biggest charger” of tariffs. One specific example he highlighted was India’s high import duties on Harley Davidson motorcycles, an issue he previously raised during his first term in office.
In 2019, Trump’s administration terminated India’s designation as a developing nation, which allowed New Delhi to export thousands of products to the US duty-free. In response, India imposed higher tariffs on several American products. Despite these tensions, the US remains India’s largest trading partner, with bilateral trade amounting to approximately $127 billion last year.
Limited Economic Impact
While the proposed tariffs could slightly hurt India’s economic growth, the damage is expected to be minimal. According to Bloomberg economists Abhishek Gupta and Eleonara Mavroeidi, India’s economy will likely be shielded from major harm by its ability to adjust. The economists noted that India could offset the negative effects of the tariffs by implementing policies that boost its manufacturing sector.
India’s Strategic Response
Bloomberg Economics suggests that India can mitigate the impact of Trump’s proposed trade barriers by introducing manufacturing subsidies and reducing import tariffs. A 4% production incentive combined with a 1 percentage-point cut to import tariffs could lead to a 0.5% boost in India’s GDP above baseline projections, the economists estimated.
Despite Trump’s tough stance on trade, his relationship with India’s Prime Minister Narendra Modi appears to remain amicable. Trump recently called Modi a “friend” and described him as the “nicest human being,” signaling a continued diplomatic relationship between the two nations.
Conclusion
India’s economy may face a small hit if Trump’s tariff plans are executed, but the overall impact is expected to be marginal. With strategic policy adjustments, India could even turn the situation into an opportunity to further boost its manufacturing sector and reduce dependence on imports. As trade threats grow, India’s resilience in the face of global challenges will be key to minimizing any economic fallout.
Bloomberg
