How Trump’s 50% Tariff Could Hit India’s Economy

OutlookIndia

From tomorrow, Trump’s imposed tariff on India could rise to 50 per cent. Higher tariffs mean Indian goods become costlier. Indian traders are forced to raise prices, American retailers resist, and the demand-supply chain gets disrupted.  The additional 25 per cent penalty tariff comes in response to India’s continued purchase of Russian crude oil, compounded by India’s pushback on Trump’s claims of brokering peace between India and Pakistan during Operation Sindoor.  Watch the full video to know more.   Reporter: Rani Jana Camera: Vikram Sharma Editor: Madiha Shakeel  Follow us: Website: https://www.outlookindia.com/ Facebook: https://www.facebook.com/Outlookindia Instagram: https://www.instagram.com/outlookindia/ X: https://twitter.com/Outlookindia Whatsapp: https://whatsapp.com/channel/0029VaNrF3v0AgWLA6OnJH0R Youtube: https://www.youtube.com/@OutlookMagazine Dailymotion: https://www.dailymotion.com/outlookindia  #USA #Tariff #DonaldTrump #India #Economy

Transcript

00:00Why are you singling India out for these additional sanctions?

00:03It's only been eight hours, so let's see what happens over the next, yeah, you're going to see a lot more.

00:09Could Trump's 50% tariff push India's economy into crisis?

00:14From tomorrow, Trump's imposed tariff on India could rise to 50%.

00:18Higher tariffs mean Indian goods become costlier, Indian traders are forced to raise prices,

00:25American retailers resist, and the demand supply chain gets disrupted.

00:30Welcome to Deep Dive with Outlook.

00:31Today, we'll discuss the looming threat of Trump's tariffs and the road ahead.

00:36The additional 25% penalty tariff comes in response to India's continued purchase of Russian crude oil,

00:44compounded by India's pushback on Trump's claims of brokering peace between India and Pakistan during Operation Sindur.

00:52However, critics believe that the rise in tariffs is a pressure tactic by Trump

00:57to seek wider market access in India, demanding tariff reductions on American products,

01:04from fruits and nuts to livestock feed and genetically modified crops.

01:09But accepting these demands could expose 85% of India's agricultural sector to U.S. competition,

01:17jeopardizing the livelihoods of millions of people and maybe even the nation's food security.

01:23A threat like this creates a massive economic ripple effect.

01:28In 2024, India exported $11.58 billion in gems and jewelry to the U.S.

01:36About 90% of Indian diamonds go there.

01:39So that is around 9 out of 10 diamonds.

01:42Dinesh Navadiya, president of the Indian Diamond Institute,

01:46says India can develop other markets.

01:48But it's not easy.

01:51Due to economic volatility, more than 80 diamond workers died by suicide last year.

01:57A massive tariff could just make a despairing situation that much worse.

02:03Textiles face similar pressure.

02:05Between 2023 to 2024, the U.S. imported $10 billion,

02:11roughly one in every $4 the sector earns internationally.

02:15And look how specific these exports are.

02:1970% of bedsheets, 50% of bath towels.

02:22They are reportedly all made specifically for American consumers.

02:27If the U.S. finds other suppliers,

02:29getting that market back would be incredibly difficult.

02:33If we zoom out, the overall impact could be massive.

02:36Research by the IMF suggests a 1% increase in Indian export prices

02:42reduces demand by 0.9%.

02:45And for manufacturing, the impact is even stronger with a 1.1% decline.

02:51The Global Trade Research Initiative estimates

02:54India's exports to the U.S. could fall nearly 30%,

02:58from $86 billion to $60 billion,

03:02worsening the youth unemployment crisis.

03:05Economist Santosh Mehrotra says,

03:07India must negotiate strategically.

03:10Why not demand that the U.S. import telemedicine services

03:14or recognize Indian medical degrees?

03:17We can play the same game as Japan and the EU.

03:21Nothing will materialize before Trump's term anyways.

03:25The impending tariff has already started influencing

03:29India's foreign policy.

03:31And diplomacy is in motion.

03:33External Affairs Minister S.J. Shankar's recent visit to Russia

03:38focused on trade expansion between India and Russia.

03:42The agreement included removing non-tariff barriers

03:46and boosting Indian exports to pharmaceuticals,

03:49agricultural and textiles.

03:52The Chinese Foreign Minister Wang Yi

03:55visited New Delhi a few weeks ago too.

03:58He held meetings with National Security Advisor Ajit Doval.

04:02Both are special representatives appointed to discuss border issues

04:06between the countries.

04:08Looking ahead, India's participation in the 25th Shanghai Corporation

04:13Organization Summit in Tianjin from August 31st

04:17signals a commitment to multilateral engagement.

04:21Academic Ravi Prasad Narayanan suggests,

04:24India, China and Russia are exploring economic cooperation,

04:28possibly even a common currency for trade,

04:31advancing the BRICS proposal as an alternative to the US dollar.

04:35As tariffs threaten trade with the US,

04:38are we watching India's economic resilience being tested

04:41or are we witnessing the map of world economics being redrawn?

04:46Read more on this in our latest issue.

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