Trump Tariffs Could Hit India in 3 Waves—Here’s What the CEA Is Warning Us About
When the world’s biggest economy sneezes, the rest of us catch a cold. But what happens when that sneeze comes with a 26% tariff attached?
Yeah, that’s the mess we’re staring at in 2025.
So, What’s Going On?
On April 2, former US President Donald Trump pulled a classic Trump move—he slapped sweeping tariffs on goods imported from America’s trading partners. The hardest hit? China. But India didn’t escape the storm either.
Among the chaos, our very own Chief Economic Adviser (CEA) V Anantha Nageswaran sat down with The Indian Express and laid out how these tariffs aren’t just numbers on a chart. They’re a three-round punch to India’s growth story.
Round One: The Hit on American Consumers—and Why It Matters to India
First things first, America is India’s biggest trading partner. When tariffs go up, American buyers—think businesses, retailers, and even regular folks—start paying more for imported goods.
Result? They buy less.
And when they buy less, guess who suffers? Yep—Indian exporters. Whether it's textiles, electronics, or even software services, demand could take a dip.
So even though the tariffs are technically aimed at other nations, India gets caught in the crossfire. Like friendly fire, but in economics.
Round Two: Are We Better Off Than the Others?
Here’s where it gets trickier. The CEA pointed out something smart (as usual): it’s not just about how India is impacted, but whether others are hit worse.
Imagine this: If countries like Vietnam, Bangladesh, or Malaysia take a bigger hit from these tariffs, maybe India could swoop in and steal some trade opportunities.
But... what if we get hit just as bad—or worse? Then India’s export advantage evaporates.
So, in global trade, it’s not just about who’s strong. It’s about who’s less weak. Tough game.
Round Three: The Ripple Effect on Financial Markets
Now let’s talk about the most underrated (and frankly, most dangerous) impact—the mood of the market.
Global stock markets tanked after Trump’s dramatic “Liberation Day” speech. Indian indices—Sensex and Nifty—bled red. Investor confidence took a nosedive.
This isn’t just about stock portfolios looking sad. When markets panic, consumers hold back. They don’t spend, don’t invest, and suddenly your friendly neighbourhood kirana store is also feeling the heat.
It’s all connected. That’s what the CEA was saying. These shocks can hurt India from multiple angles—exports, sentiment, and even domestic spending.
But Hey, It’s Not All Doom and Gloom
Here’s the silver lining Nageswaran pointed out—and it’s a big one:
Energy prices are falling. And for a country like India that imports most of its oil? That’s huge.
Lower oil prices =
- Lower input costs for businesses
- Less inflation pressure
- More room for the government to maneuver
Private firms, he urged, should seize this moment to boost growth. After all, India has a massive domestic economy. We just need to make it easier to do business here.
Policy, Policy, Policy: What Can India Do?
CEA’s advice was clear:
- Make it cheaper and easier to do business
- Improve logistics, infrastructure, and digital access
- Reduce unnecessary regulatory roadblocks
Basically, let businesses breathe. That way, even if exports take a hit, domestic demand can hold the fort.
Meanwhile, RBI Is Also Doing Its Bit
In a surprise but welcome move, the RBI cut the repo rate by 25 basis points on April 9. It also shifted its stance from “neutral” to “accommodative.” Translation? More cuts may be coming—if inflation behaves.
But here's the catch. Nageswaran was refreshingly honest:
“Interest rates spur real estate investment... which boosts consumption spending more than investment spending.” So yeah, lower interest helps, but it’s not the magic bullet. Especially for capital formation and industrial expansion. For that, we need deeper reforms.
What Should We Be Watching?
Here’s your cheat sheet:
✅ India’s export performance in coming quarters
✅ Tariff decisions from the US (flip-flops likely)
✅ Energy prices (keep an eye on crude oil)
✅ RBI’s future rate cuts
✅ How quickly India makes doing business easier
Trade Wars, Tariff Trauma & India’s Way Forward
Trade wars are messy. They hurt more than they help. And when leaders start using tariffs like toys, it’s the developing economies—like ours—that pay the price.
But if there’s one thing India has going for it, it’s resilience. Our domestic market is strong. Our entrepreneurs are resourceful. And if the government listens to its top advisors, like Nageswaran, we might just come out of this stronger.
