US President Donald Trump Announces Sweeping Trade Restrictions on India

US President Donald Trump has announced a 25% tariff on all Indian imports starting August 1, alongside an additional penalty targeting India's recent defence and energy purchases from Russia. This move, communicated via Truth Social, cites India's trade barriers and its military and energy dealings with Russia amidst the Ukraine conflict.

Experts React to the New Tariffs

Madhavi Arora of Emkay Global views the situation through a geopolitical lens, suggesting that despite the breakdown in negotiations, a trade deal between the two nations is still on the horizon. Agneshwar Sen from EY India calls the tariff hike unfortunate but remains hopeful about ongoing negotiations.

Garima Kapoor of Elara Securities anticipates a deal by the end of Q3, despite potential short-term market volatility. Ranen Banerjee of PwC India highlights the competitive disadvantage higher tariffs place on Indian exports but expects a swift resolution.

Sakshi Gupta of HDFC Bank warns of immediate currency market volatility, while Aditi Nayar of ICRA cautions about the potential GDP growth implications for India.

Sector-Specific Concerns

Kirit Bhansali of the Gem and Jewellery Export Promotion Council expresses deep concern over the tariffs' impact on the Indian gem and jewellery sector, a significant exporter to the US. N Thirukkumaran of the Tiruppur Exporters’ Association sees the tariffs as a negotiation tactic, remaining optimistic about a future trade agreement.

Nilesh Shah of Kotak Mahindra AMC emphasizes the need for growth-supportive policy-making in India, while Rahul Mehta of the Clothing Manufacturers Association of India discusses the potential competitiveness loss for Indian apparel exports.

SC Ralhan of the Federation of Indian Export Organisations and Colin Shah of Kama Jewellery highlight the challenges faced by export-heavy sectors, urging for a bilateral trade agreement.

Ashok Chandak of the India Electronics & Semiconductor Association points to the need for India to diversify its export markets and move up the value chain.

Looking Ahead

Avinash Gorakshakar of Profitmart Securities advises against premature speculation, noting India's market attractiveness. Harsha Vardhan Agarwal of FICCI remains hopeful for a beneficial trade deal, emphasizing the mutual benefits of India-US trade relations.