INSTANT VIEW - Trump order imposes an additional 25% tariff on Indian goods
The U.S. president Donald Trump issued a executive order Wednesday that imposed an additional 25% tariff for goods coming from India. He claimed the country had directly or indirectly imported Russian crude oil.
India, along with Brazil will be subject to the highest tariffs. This puts it at a disadvantage compared to regional competitors like Vietnam and Bangladesh.
Tariffs will be implemented 21 days after the date of the Executive Order.
BRIAN JACOBSEN CHIEF ECONOMIST, ANNEX - WEALTH MANAGEMENT WISCONSIN
The extra 25% tariff on Indian imports may be more symbolic than substantive. The tax will not be imposed for another 21 days. This is a large window for a possible exit.
It is also easier to identify which products are exempted from tariffs than to determine the goods that are subject to them. This could explain the lack of reaction from the market to the announcement.
COLIN SHAH MANAGING DIRECTOR KAMA JEWELRY
This additional 25% duty is a blow to India's exports, and especially to its gems & jewelry sector. This will result in a steep rise in duty on studded gold jewelry exports from India. As a consequence, Indian jewellery exports into one of the largest consumer markets are likely to decline.
A. PRASANNA CHIEF ECONOMIST ICICI SECURITIES PRIMARY DEALERSHIP MUMBAI
The additional rate will take effect after 21-days, but will be added to the 25% that was already in place. This will result in a total of 50% for Indian exports. Some key segments, such as electronics and pharmaceuticals, are still exempted from the additional rate.
Many Indian exports are at a disadvantage compared to countries in the 15-30% range.
SAKSHI GUPTA - PRINCIPAL ECONOMIST HDFC BANK GURUGRAM
In the event that a deal is not reached, Trump's order will give us another 21 days to reach a resolution. If this does not happen, our forecast for FY26 GDP growth will be significantly lowered to below 6%. This would mean a 40-50 basis point hit. This would be twice our previous estimates (of the GDP hit by higher tariffs).
TERESA JOHAN, LEAD ECONOMIST NIRMAL BANK, INSTITUTIONAL EQUALITIES, MUMBAI
India is under increasing pressure to reach a trade deal. India could agree to reduce its Russian purchases in a gradual manner, and to diversify.
GAURA SEN GUPTA ECONOMIST IDFC FIRST BANK MUMBAI
After this order, bilateral tariffs are expected to rise by 50%. This would be the highest rate of tariffs from August. This increases the risk of a lower GDP estimate for 2025-26.
The total risk of a negative outcome is currently estimated to be between 0.3% and 0.4% if tariffs continue until March 2026.
MANOJ MISHRA is a Partner at GRANT THORNTON BARAT in NEW DELHI
India's merchandise exported to the U.S., at $87 billion during FY25, represents only a modest 2% of India’s GDP. Although the impact is notable, it's not likely to be serious.
This new development highlights the need to diversify markets for exports, reduce dependence on a single trading partner and take advantage of India's growing FTA network in order to increase trade resilience over time and sustain export growth.
WILLIAM O'NEIL, WILLURESH JOSHI - HEAD OF EQUITY RESEARCH – INDIA
Markets have already begun pricing in the possibility of a steep tariff increase, but a knee-jerk response is likely to occur in the near term unless there is a rapid clarity or breakthrough in negotiations.
India's crude imports remain diversified - we source from other countries, including the U.S. Russia is only one part of our crude oil basket.
Structurally, I do not see a major disruption in the OMCs or Reliance. That said, the broader sentiment--especially around export-driven sectors--could take a short-term hit.
(source: Reuters)
