As the United States enforces additional 25% tariffs on Indian exports, global brokerages have raised red flags over the potential economic fallout, trade disruption, and geopolitical ripple effects. While negotiations remain possible over the next 21 days, analysts see sharp risks to India’s short-term growth and export viability, particularly for industries with low margins and limited value addition.
Citi on US tariffs: 42.4% effective rate may make most exports unviable
Citi warns that the weighted average US tariffs could rise sharply to 42.4% from the 13.2% during the pause period—and much higher than the 2.7% level seen before 2025. According to the brokerage’s linear model, the elevated tariff regime could shave off 0.6 to 0.8 percentage points from India’s annual GDP growth.
Citi further cautions that the actual economic impact could be even higher, as many Indian exports may become commercially unviable at this elevated tariff level, leading to a direct hit to India’s export competitiveness.
Nomura on US tariffs: Growth risks akin to a trade embargo
Nomura believes the short-term risks to India’s growth trajectory have intensified. The US accounts for nearly 18% of India’s total exports and about 2.2% of GDP in FY25, making it a critical market.
If the steep 50% tariffs become effective, Nomura equates the scenario to a “trade embargo” that would lead to a sudden halt in affected products. Many industries, particularly those with low margins and limited value addition, could face operational stress, potentially leading to job losses and factory shutdowns in the worst-hit sectors.
BofA on oil impact: Crude supply shift may hurt OMCs, benefit upstream players
Bank of America (BofA) highlights the energy trade dimension, exploring the possible consequences of India curtailing its Russian oil imports. Russia accounted for 10.4% of global crude supply in CY24, and India sourced 13–18% of that volume.
If crude procurement from Russia is reduced or halted, BofA sees this being negative for Oil Marketing Companies (OMCs) due to costlier alternatives. However, upstream exploration and production (E&P) firms may benefit from higher domestic demand. Still, with Russian oil discounts narrowing in recent months, the brokerage believes the macro impact may be limited.
Jefferies on outlook: Cost manageable, political hurdles remain
Jefferies notes that the direct economic cost to India of replacing Russian oil would be modest—less than 15 basis points of GDP. With oil markets relatively flat in the past week, Jefferies believes alternative supply lines remain available.
However, the brokerage warns that the real bottlenecks lie in unresolved issues over dairy and agricultural trade. The political fallout of US demands on these sectors continues to be the key stumbling block. Still, Jefferies remains “hopeful of an eventual trade deal” between the two nations, pointing to room for diplomatic resolution.
Disclaimer: The views and opinions expressed are those of the respective brokerages. They do not constitute investment advice. Readers are advised to consult financial experts before making any investment or policy decisions.
