Another report projected that US import tariff increase will have less impact on India as compared to other Asian countries, as the Indian economy is less export-oriented
As US President-elect Donald Trump is mulling to impose tariffs on imports, India is less prone to tariff risks, according to a recent report by international brokerage firm Morgan Stanley. The report mentioned that the structural tailwinds and continuation of the right policy mix will ease the impact of the US tariff increase on the Indian economy. The brokerage projected that a 10 per cent increase in tariffs on imports from India could decrease growth by 30 basis points or so.
“Structural tailwinds and continuation of the right policy mix will provide offset against tariffs,” said the chief Asia economist at Morgan Stanley, Chetan Ahya.
India is experiencing a slowdown in GDP growth, which stood at 6.3 per cent in the third quarter, but the Indian economy is expected to pick up and witness 6.7 per cent growth in the December 2024 quarter and 6.8 in the quarter ending in March 2025, according to the brokerage firm.
The move to tighten import tariffs was first announced by Trump in a speech at the Detroit Economic Club in Michigan. Trump said India is a “very big abuser” of trade agreements and if he returns to power, his economic policy for international trade will be based on the principle of reciprocity. Apart from India, he has also targeted China and Brazil for their import tariffs.
“Perhaps the most important element of my plan to make America extraordinarily wealthy again is reciprocity. It’s a word that’s very important in my plan because we generally don’t charge tariffs,” said Trump.
The push for import tariffs is due to Trump’s ‘America First’ policy, where the President-elect is eyeing boosting US manufacturing.
As per a report by Motilal Oswal Private Wealth, Trump’s move could witness retaliatory behaviour from trade partners, which might impact US exporters particularly, those in agriculture and technology.
Another report by Fitch Ratings has projected that tariff increases will have less impact on India as compared to other Asian countries, as the Indian economy is less export-oriented.
“Hong Kong, Taiwan, Singapore and Malaysia also stand out as economies that would be significantly hit. India, which is less export-oriented than many other Asian economies, would be relatively unaffected,” said Fitch Ratings in its report.