US Imposes Steep Tariff Hike on Indian Goods
The effective tariff rate of Indian products by the US has increased and in 2025 stood at 20.7 percent as compared to 2.4 percent in 2024, as Fitch Ratings added an 18.3 percent point increase in this year.
This is observed to be negative to the economic growth of India to a certain extent due to the increase in tariffs. In total, the US effective tariff level is 17 percent currently, down about eight percent points compared to April 3, when increased reciprocal tariffs were initially announced, it added.
It includes US tariff rate 17 percent, a tariff rate of 15 percent on EU products, the auto and auto parts, and exorbitant tariffs in terms of primary trade partners, Brazil, Taiwan, India and Switzerland, it said.
Last week, US President Donald Trump announced a 25 percent tariff on Indian goods, along with an unspecified additional penalty related to India's energy dealings with Russia.
Goldman Sachs said, cut India's economic growth forecast to 6.5 percent for 2025 and 6.4 percent for 2026, due to US tariffs. "In our view, some of these tariffs are likely to be negotiated lower over time, and further downside risk to the growth trajectory mainly emanates from the uncertainty, "
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According to HDFC bank, the tariff poses a downside risk of 20-25 bps to India's GDP growth.
Christian de Guzman, senior vice president, Moody's Ratings, said, "Curtailed access to the largest economy globally diminishes prospects for India's ambitions to develop its manufacturing sector, particularly in higher value-added sectors such as electronics".
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He added, "India's economy is expected to remain resilient as it is less trade-reliant than other large economies in the Asia-Pacific."