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EYE ON INDIA FEBRUARY 28, 2025 | The Indian Eye 6

TRUMP’S TARIFFS

Govt hopeful of a deal with US and as stocks

become volatile amid fears of shrinking GDP

In the latest, US President Donald Trump indicated he would impose tariffs on autos

and pharmaceuticals — expected to impact Indian businesses

OUR BUREAU
Mumbai
S President Trump’s tariff may impact In-
dia’s Gross Domestic Product (GDP) in
Ubetween 0.1 to 0.6 according to a report
by Goldman Sachs. The report which analyses the
impact of US tariffs on India’s GDP under coun-
try-level reciprocity, product-level reciprocity says,
“India’s domestic activity exposure to US final de-
mand would be roughly twice as high (4.0 per cent
of GDP) given exposure to the US via exports to
other countries, and would likely result in a poten-
tial domestic GDP growth impact of 0.1-0.6pp.”
Indian stock indices continued to remain vola-
tile over concerns about Trump’s tariff announce-
ments and weak global cues. The benchmark indi-
ces opened in the red to later trade in the green. At
closing, it closed marginally lower.
In the latest, US President Donald Trump indi-
cated he would impose tariffs on autos and pharma-
ceuticals -- expected to impact Indian businesses.
US President Donald Trump reiterated his
stance on tariff reciprocity in a joint press confer-
ence with Prime Minister Narendra Modi recently,
emphasising that the United States will match tar-
iffs imposed by other countries, including India, to Union Minister of Commerce and Industry Piyush Goyal (ANI Photo/Amit Sharma)
ensure fair trade. This has likely kept investors on
tenterhooks. commitment at WTO to keep customs duty at ters, such as non-tariff barriers, are brought into
Domestic stock markets are also under pres- around 50%. the picture. In any case, the assessment by the US
sure due to the continued outflow of foreign port- Although the commerce department has start- commerce department is expected to be followed
folios from India for the second month. ed consultations with other govt ministries and de- by an investigation, according to some accounts.
Sensex is now a little over 10,000 points below partments, it is awaiting the Trump trade team to Meanwhile, lauding the strong India-US rela-
its all-time high of 85,978 points. Sensex has so far be in place and keeping a close watch on how the tions, Union Minister Piyush Goyal said that both
slumped over 3 per cent this New Year. issue of reciprocal tariff plays out in the coming nations want to further strengthen their Compre-
Weak domestic economic growth has also days and dismissed reports and estimates - includ- hensive Strategic Partnership, and the friendship
been reflecting on the stock markets. The recent ing by leading global banks - as “speculation”. between Prime Minister Narendra Modi and US
RBI repo rate cut failed to cheer markets, amid Besides, officials from the commerce and rev- President Donald Trump is the harbinger of strong
volatility world over. enue departments are also expected to assess the bilateral ties.
Now, the government has begun its homework level of tariffs at the overall level and at the micro Speaking to reporters on the sidelines of the
for the proposed trade deal with the US, it has in- level as they formulate the negotiating strategy. Asia Economic Dialogue on Thursday, Goyal said,
dicated its willingness to engage in tariff reduction While govt has already lowered tariffs for “I think that India and the United States want to
with Trump administration on a bilateral basis, ar- bourbon whisky and bikes, a move that favours the improve their relationship, whether it is in relation
guing that with an “aggressive neighbourhood” in iconic Harley Davidson, the US has pocketed the to investment, in relation to business, or in relation
China duties cannot be lowered significantly for all gains and is exerting pressure for further cuts. Of- to technology or our comprehensive strategic part-
trading partners, while hoping to get a good deal ficials are, however, keeping the cards close to the nership in relation to defence.”
on services, as well as visas for businesses and pro- chest, fearing that the negotiating strategy would “Every year it is increasing...and the relation-
fessionals. become public. ship between Prime Minister Modi and President
Amid repeated statements by US president Besides, the final negotiating position will de- Trump is so good that I have no doubt that in the
Donald Trump on India’s “high tariffs”, sourc- pend on how US proceeds with reciprocal tariffs, coming days India and America are two democrat-
es asserted India’s average tariffs of around 17% given that it is unclear whether it would be coun- ic countries and good relations and big business
(which has further come down) is well within its try-specific or goods-specific and if other parame- and will work closely,” he added.

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