Trump's 50% tariffs may cut exports to US by 60%, lower GDP growth by 1%, say analysts

US President Donald Trump’s 50 per cent tariffs could lower India’s GDP growth this year by up to 1 per cent and cut exports to the United States by up to 60 per cent, according to various projections.

Trump on July 31 imposed 25 per cent tariff on India as part of the rollout of tariffs on more than 60 countries. He topped that with 25 per cent additional tariff on Wednesday over the purchase of Russian oil — taking overall tariffs to 50 per cent.

In the worst-case scenario, the toll could be as high as 1.1 per cent, according to a Bloomberg Economics projection.

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In the immediate future, sectors like marine products (shrimp, prawn), edibles (fruits, pickles), and textiles are the most vulnerable owing to their short shelf-life and slim profit margins. They are also labour-intensive sectors, which means that any disruption could affect thousands of households.

Trump’s 50% tariff could cut exports to US by 60%

Bloomberg Economics has projected that Trump’s 50 per cent tariffs could cut India’s exports to the United States by 60 per cent and lower the GDP growth for the financial year 2025-26 by 1 per cent.

The overall hit to the GDP could be even higher at 1.1 per cent over the medium term once tariffs on sectors such as pharmaceuticals and electronics are stacked on top of 50 per cent tariffs already announced, analysts Chetna Kumar and Adam Farrar noted.

Separately, Morgan Stanley in report has projected that 50 per cent tariffs for a longer period of time, such as 12 months, could lower India’s GDP growth by 0.4-0.8 per cent. However, it indicated that India will likely not face the worst-case scenario as policy support is expected in case tariffs persist for a long time.

Goldman Sachs has projected a toll of 0.6 per cent and Citigroup has projected GDP growth reduction of 0.6-0.8 per cent.