Indian business leaders believe that the recent U.S. tariffs by President Donald Trump will have minimal impact on the Indian economy, even though they have caused a huge reshuffling of global trade. The U.S. has slapped a 26% retaliatory tariff on Indian goods, which is lower than some Asian rivals like Vietnam and China.
Trade associations such as ASSOCHAM believe that while the tariffs would induce restructuring of global supply chains, India's export competitiveness in the U.S. would be impacted to a very limited extent. Textiles, electronics, and auto parts may, however, get impacted due to higher tariffs.
The government of India is negotiating with stakeholders to assess implications and look for opportunities arising out of the same.
In the short term, India's GDP will be affected by a paltry 0.1%, and domestic consumption and industrial competitiveness will mute the impact. Long-term impacts are contingent on the result of ongoing trade negotiations between India and the U.S. Despite potential disruptions, India's diversified export base and growing domestic demand are considered to be cushions against severe economic dislocation.
