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BUSINESS & TRADE SEPTEMBER 05, 2025 | The Indian Eye 42

US Tariffs to Weigh on Indian

Exports in Short Term, Long-Term

Outlook Remains Resilient

OUR BUREAU
Mumbai / New Delhi
ndia’s financial markets ended lower for a
second straight session on Thursday after the
IUnited States imposed fresh tariffs on Indian
imports. While investor sentiment has clearly taken
a hit, government officials and economists stressed
that the impact of these trade barriers will be large-
ly short-lived, cushioned by reforms, diversification,
and robust domestic demand.
The BSE Sensex dropped 705.97 points, or
0.87 per cent, to close at 80,080.57, while the Nif-
ty 50 slipped 211.15 points, or 0.85 per cent, to
24,500.90. Export-heavy sectors like IT, chemicals,
and textiles bore the brunt of selling, with broader
indices such as Nifty Midcap 100 and Nifty Small-
cap 100 also sliding more than one per cent.
Analysts attributed the fall to renewed trade
tensions with the US. “Tariffs happened, truce did
not,” said banking and market expert Ajay Bagga,
noting that conflicting signals from Washington
had unsettled investors. “Democrats in the US are
calling Trump’s sanctions on India a self-goal.”

SHORT-TERM PAIN Members of the Akhil Bharatiya Udyog Vyapar Mandal take out an awareness rally promoting the adoption of Swadeshi prod-
ucts in Lucknow on Wednesday in protest against the tariff imposed on India by U.S. President Donald Trump (ANI photo)
mid the market volatility, the Commerce
Ministry moved to reassure industry. A se-
Anior official acknowledged that higher tar- medium-term momentum remain under pressure. LIMITED IMPACT ON GDP
Yet experts note that structural policy measures
iffs—raised to as much as 50 per cent—would hurt will limit long-term damage. “The government’s in- oth government and private economists
Indian exporters in sectors such as textiles, chemi- frastructure push and rising domestic consumption agree that while exporters will face short-
cals, and machinery. However, he emphasized that
should offset some export weakness,” said Dipti Bterm disruption, the impact on India’s over-
the damage would be temporary. Deshpande, Principal Economist at Crisil. “Rural all GDP will remain minimal. Trade with the US
“It is understood that 50 per cent tariffs are go-
ing to impact trade in the short run, but it will not demand, in particular, could provide resilience.” accounts for an important share of India’s exports,
The Commerce Ministry is also encouraging but the economy is increasingly driven by domestic
be a very long-term loss,” the official told ANI. Ex- exporters to leverage e-commerce platforms and consumption and investment.
porters, he admitted, may face liquidity constraints
strengthen B2B connections through diplomatic
“Some sectors will face pain if tariffs persist,
due to slowing orders and delayed payments. But missions abroad. While no new round of bilater- but India’s growth story remains intact,” Desh-
the government is preparing targeted relief, includ- al trade talks with the US is on the table for now, pande noted. “The bigger picture is that domestic
ing an accelerated rollout of the Export Promotion officials stressed that negotiations have not been demand and public investment are strong buffers.”
Mission (EPM) to cushion the blow. abandoned. In the near term, markets may continue to
Officials also view the situation as an oppor-
Latest data on the Index of Industrial Produc- reflect anxiety over the trade standoff. Exporters
tunity to diversify exports. “Every little challenge tion (IIP) reinforced this narrative of resilience. In- in textiles, chemicals, IT, and machinery will face
is a wake-up call,” the official said. “Industry and dustrial output grew 3.5 per cent in July 2025, up margin pressures and potential order losses. But
governments must now broaden export markets from 1.5 per cent in June. Manufacturing, led by the government is betting on policy support, diver-
and product bases.”
sectors like basic metals and electrical equipment, sification, and resilient consumption to limit long-
MARKET IMPACT grew by 5.4 per cent, offsetting a decline in mining. term fallout.
Infrastructure and construction goods showed As the Commerce Ministry official summed up:
he immediate impact of the tariff hike has the strongest growth at 11.9 per cent, driven by “This is not 2019, when global trade wars slowed
been a dip in confidence. Nifty has now cor- government capital expenditure. “This frontload- everyone down. Today, India’s fundamentals are
Trected by over 650 points in just five sessions, ing of infrastructure spending shows that the do- stronger, and the economy is better positioned to
slipping below its key moving averages. Sudeep mestic economy is not entirely dependent on exter- absorb shocks. These tariffs are a challenge—but
Shah of SBI Securities warned that both short- and nal demand,” Deshpande said. only in the short run.”

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