Goldman Sachs has projected that India’s GDP growth could decline by 0.1-0.6 percentage points if US President Donald Trump enforces reciprocal tariffs on countries with higher taxes on US goods, including India. This comes as Trump plans to address trade imbalances through targeted tariffs.
The investment firm outlined three potential scenarios:
- Country-level reciprocity – Imposing a 6.5% tariff on all Indian imports, reflecting the average tariff differential.
- Product-level reciprocity – Matching India’s tariffs on each product, potentially increasing tariffs by 11.5%, though complex to implement.
- Inclusion of non-tariff barriers – Addressing administrative hurdles and export subsidies, leading to even higher tariffs but challenging to quantify.
India’s exports to the US are relatively low, constituting about 2% of its GDP, with the most significant tariff differences in agriculture, textiles, and pharmaceuticals. If country-level or product-level tariffs are imposed, India’s GDP could drop by 0.1-0.3 percentage points.
In a scenario where global tariffs are enforced, India’s indirect exposure to US demand could double to 4% of GDP, leading to a 0.1-0.6 percentage points hit to domestic growth, placing India in the mid-range among Asian peers, as per Goldman Sachs’ analysis.
Disclaimer: This article is for informational purposes only and should not be considered as investment advice. Investors are advised to do their own research or consult with a financial advisor before making any investment decisions.
