It is not easy to make stakeholders of a $4-trillion economy anxious. But that’s exactly what US President Donald Trump has done with his reciprocal tariffs threat. From Dalal Street to the Mint Street, from the boardrooms to policy corridors, everyone is waiting for the surprises Trump will pull out of his sleeve on April 2.
India has one of the highest trade-weighted average tariff rates in the world. According to the World Trade Organisation (WTO), it was 12 per cent in 2023-24 against 2.2 per cent for the US.
Trump, the consummate negotiator, on his part has been piling on the pressure. His statements on reciprocal tariffs are frequent. The latest being on March 19 when in an interview with Breitbart News, he said, “I believe India is probably going to be lowering those tariffs substantially, but on April 2, we will be charging them the same tariffs they charge us”.
Here’s a look at what global agencies say about the impact of Trump’s reciprocal tariffs on India.
S&P Global: India protected
The latest report is by S&P Global Ratings which says that a robust economy and a low exposure to the US protects India from the effects of Trump tariffs. The tariffs are likely to have a limited indirect impact as India’s export sector accounts for just over a tenth of its GDP.
However, there could be disruption in some sectors. “India’s low US exposure reduces tariff risks, but indirect effects, such as trade redirection to the country, could hit the steel and chemicals sectors,” S&P said in a report.
The rating agency added that most Indian firms rated by it can withstand temporary earnings slowdowns.
Fitch: India somewhat insulated
Fitch has maintained its projection of 6.5 per cent GDP growth rate for India in 2025-26. It however warns that the “more aggressive-than-expected” US trade policies could pose a big risk to the growth forecast.
According to Fitch, “Business confidence remains high and lending surveys point to continued double-digit growth in bank lending to the private sector”, adding that India is somewhat insulated from US tariff actions “given its low reliance on external demand”.
Moody’s: Sectoral impact
Companies in the automotive, steel, chemicals and business-services sectors in South and Southeast Asia are most exposed to US tit-for-tat tariffs, which could reduce demand and increase costs, Moody’s Ratings said in a report. However, sectors like mining, oil and gas, shipping, investment holding companies, and protein and agriculture are the best suited to withstand the impact, the rating agency said. The mitigants include strong domestic operations, diversified supply chains, and US operations.
When it comes to steel and chemical companies, the proposed tariff measures by the US will have minimal direct impact, but would divert surplus steel and petrochemicals to other markets, including Asia, adding to the already high supply in the region, the report said. This would weaken prices and hence reduce the profitability of these companies.
IT companies are better positioned to absorb increased costs. According to the agency, though not directly subject to tariffs, business service providers are exposed to changes in US immigration policy, which could shrink the talent pool for companies operating in the US that rely on foreign workers.
Moody’s also says that Reliance Industries, which exports around half of its production from its oil-to-chemicals segment, would likely be exposed indirectly to the trade restrictions among countries. However, the company’s strong balance sheet is seen absorbing potential declines in demand or profits.
Negative impact on growth
Goldman Sachs, has meanwhile, forecast the Indian GDP to take a hit of 10-60 bps from Trump tariffs. “India’s gross exports to the US is one of the lowest among its emerging market peers at around 2.0% of GDP. However, in case of global tariffs on all countries from the US, India’s domestic activity exposure to US final demand would be roughly twice as high given exposure to the US via exports to other countries, and would likely result in a potential domestic GDP growth impact of 0.1-0.6 percentage point,” Goldman Sachs said in its report.
The Goldman Sachs report says there are three ways the US can impose tariffs on India – on all products imported from India by weightage average tariff differential, by matching India’s tariffs on each product, or using non-tariff barriers such as administrative barriers, import licenses, etc.
