Trump Tariffs Shake Global Markets: India Holds Ground Amid Trade Turmoil

In a bold move to reduce its $1 trillion yearly trade deficit, the US has put a 10% general tariff on imports from all nations. In addition to rattling international markets, the decision has sparked worries about inflation and the stability of the economy of a number of different countries. Nonetheless, India seems to be in a better position than many of its international counterparts to handle this changing trading environment.

As per an article by Mint, Japan (24%), Taiwan (32%), and China (34%) are also heavily affected; India's actual tariff impact is 26%. At 20%, the EU has a marginally lower rate. It is anticipated that these tariffs will raise import prices, which could result in a 1% increase in US inflation. The 10% base tariff is still in effect for 180 countries until the conclusion of ongoing bilateral trade negotiations. The fact that official negotiations between the US and India are now planned for September 2025 is encouraging. Until then, India won't be subject to any new tariffs, and if these talks go further, the current duties may even be rolled back.

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The IT and healthcare industries in India are likewise mostly immune to the tariff increases. As the US struggles to reduce healthcare expenses, the healthcare sector has escaped extra duties thanks to strong US business economics. It is also anticipated that the FDA-regulated pharmaceutical industry would continue to see robust export growth. Since it is mostly a service-based industry, the IT sector is not directly impacted by tariffs, but it is nevertheless susceptible to wider macroeconomic fluctuations.

In contrast, certain sectors could feel the pressure. Not only India’s gems but also jewelry exports—where it holds global leadership—may be impacted by the higher US tariffs. The textile sector, however, may see a neutral effect, as India's tariff rates remain lower compared to competitors not only like Bangladesh and Vietnam but also China.

On the energy front, tariffs on cheaper oil imports from not only Russia but also Venezuela could raise input costs for Indian refiners. The impact is limited, though, as India imports a small share from the US due to high freight charges. Financials may see indirect strain, as softer economic activity could reduce not only credit demand but also raise asset quality risks for trade-exposed NBFCs.

Conclusion:

Despite the sweeping US tariff policy, India stands out as relatively resilient among global peers. With key sectors shielded and bilateral negotiations underway, India's path forward hinges on not only diplomatic progress but also strategic industry responses.