It isn’t simple to make stakeholders of a $4-trillion economic system anxious. However that’s precisely what US President Donald Trump has carried out together with his reciprocal tariffs risk. From Dalal Avenue to the Mint Avenue, from the boardrooms to coverage corridors, everyone seems to be ready for the surprises Trump will pull out of his sleeve on April 2.
India has one of many highest trade-weighted common tariff charges on this planet. In accordance to the World Commerce Organisation (WTO), it was 12 per cent in 2023-24 in opposition to 2.2 per cent for the US.
Trump, the consummate negotiator, on his half has been piling on the stress. His statements on reciprocal tariffs are frequent. The newest being on March 19 when in an interview with Breitbart Information, he stated, “I consider India might be going to be reducing these tariffs considerably, however on April 2, we shall be charging them the identical tariffs they cost us”.
Right here’s a have a look at what international agencies say concerning the impact of Trump’s reciprocal tariffs on India.
S&P Global: India protected
The newest report is by S&P Global Scores which says {that a} sturdy economic system and a low publicity to the US protects India from the results of Trump tariffs. The tariffs are probably to have a limited oblique impact as India’s export sector accounts for simply over a tenth of its GDP.
Nevertheless, there might be disruption in some sectors. “India’s low US publicity reduces tariff dangers, however oblique results, corresponding to commerce redirection to the nation, may hit the metal and chemical substances sectors,” S&P stated in a report.
The rating company added that almost all Indian companies rated by it could possibly stand up to momentary earnings slowdowns.
Fitch: India considerably insulated
Fitch has maintained its projection of 6.5 per cent GDP development fee for India in 2025-26. It nonetheless warns that the “extra aggressive-than-expected” US commerce insurance policies may pose an enormous threat to the expansion forecast.
In accordance to Fitch, “Enterprise confidence stays excessive and lending surveys level to continued double-digit development in financial institution lending to the non-public sector”, including that India is considerably insulated from US tariff actions “given its low reliance on exterior demand”.
Moody’s: Sectoral impact
Corporations within the automotive, metal, chemical substances and business-services sectors in South and Southeast Asia are most uncovered to US tit-for-tat tariffs, which may scale back demand and enhance prices, Moody’s Scores stated in a report. Nevertheless, sectors like mining, oil and gasoline, delivery, funding holding firms, and protein and agriculture are the very best suited to stand up to the impact, the rating company stated. The mitigants embody sturdy home operations, diversified provide chains, and US operations.
When it comes to metal and chemical firms, the proposed tariff measures by the US will have minimal direct impact, however would divert surplus metal and petrochemicals to different markets, together with Asia, including to the already excessive provide within the area, the report stated. This might weaken costs and therefore scale back the profitability of those firms.
IT firms are higher positioned to soak up elevated prices. In accordance to the company, although circuitously topic to tariffs, enterprise service suppliers are uncovered to adjustments in US immigration coverage, which may shrink the expertise pool for firms working within the US that rely on overseas employees.
Moody’s additionally says that Reliance Industries, which exports round half of its manufacturing from its oil-to-chemicals section, would probably be uncovered not directly to the commerce restrictions amongst nations. Nevertheless, the corporate’s sturdy stability sheet is seen absorbing potential declines in demand or income.
Damaging impact on development
Goldman Sachs, has in the meantime, forecast the Indian GDP to take successful of 10-60 bps from Trump tariffs. “India’s gross exports to the US is among the lowest amongst its rising market friends at round 2.0% of GDP. Nevertheless, in case of world tariffs on all nations from the US, India’s home exercise publicity to US closing demand can be roughly twice as excessive given publicity to the US by way of exports to different nations, and would probably lead to a possible home GDP development impact of 0.1-0.6 share level,” Goldman Sachs stated in its report.
The Goldman Sachs report says there are 3 ways the US can impose tariffs on India – on all merchandise imported from India by weightage common tariff differential, by matching India’s tariffs on every product, or utilizing non-tariff obstacles corresponding to administrative obstacles, import licenses, and so on.
Source link
#Reciprocal #tariffs #limited #impact #India #Global #rating #agencies
