Trump Tariff News Live: What’s the way forward?
“It is worth noting that India runs an $38 bn trade surplus with the US (in 2024). 18% of India’s overall export go to the US, valued at 2.1% of GDP ($81 bn in 2024). The main items India sells to the US are electronics, precious stones, pharmaceutical products, textiles, and machinery. The main items it buys from the US are mineral fuel, precious stones, machinery, and electronics.
At these tariff rates, if the burden of higher tariffs is equally split between Indian producers and US consumers, it could directly shave off 0.3ppt from India’s GDP growth. The penalty rate, if levied, would shave off further from growth, and there could be an indirect growth drag as well, led by lower capital inflows, investment.
Another way to interpret today’s announcement is to see it as a starting point for renewed negotiation. The Indian government’s response on staying committed to the negotiations speak to that.
As per news reports, the US-India trade deal had already reached advanced stages, but for some sticking points such as the US demanding access to sectors such as agriculture, dairy and genetically modified feed, which India was reluctant to give, given its large population dependent on agricultural income.
Then there were some other sticking points such as trade in animal-based oils, and India’s non-monetary trade barriers (import bans, licensing requirements, etc), which President Trump referred to as ‘strenuous and obnoxious’
Alongside some give-and-take in the sticking points discussed above, resolving the issue around oil purchases could guide the way forward,” says HSBC Global Investment Research.
