ThePrint ThePrintPod: India will absorb Trump tariff impact due to its Achilles’ heel
Aug 26, 2025
The discussion dives into the ramifications of US tariffs on India's economy, highlighting how the new trade barriers may deter future investments. Despite this, India's large domestic market is seen as a magnet for ongoing investment. The conversation also calls attention to the need for significant reforms and government strategies to enhance India’s manufacturing competitiveness. Plus, there's an insightful analysis comparing India's situation to that of China, revealing both challenges and opportunities.
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Tariffs Mirror China's Hit Labour-Intensive Exports
- The Trump administration imposed a 25% tariff on India, effectively matching many China tariffs and jeopardizing China-plus-one strategies.
- Approximately $45 billion of Indian exports (1.2% of GDP) — mainly labour-intensive goods — would face the higher tariff and hurt competitiveness for US markets.
Temporary Tariff Spike Likely, Timing Is Crucial
- The additional 25% tariff tied to Russian oil imports is likely temporary rather than permanent.
- Timing matters more than permanence: the key question is when tariffs will fall back to lower levels.
India's Trade Orientation Stays West
- Despite warmer ties with Russia, India's long-term growth and export path points toward the EU and US rather than BRICS.
- India already exports more to the US annually than to all BRICS combined and runs trade deficits with most Asian partners.