The U.S. imposed a 25% punitive tariff on Indian goods this week, escalating trade tensions between the two nations. Washington cited India's imports of Russian oil as justification, while New Delhi condemned the move as politically driven and harmful to its economy. Cumulative U.S. tariffs on Indian products now stand at 50%, raising fears of slowed economic growth and supply chain disruptions.
Economic Ripples Across Key Sectors
India estimates $48.2 billion in exports could be affected, with consultancy Capital Economics predicting a 0.8% reduction in annual GDP growth through 2024. Ajay Srivastava, founder of the Global Trade Research Initiative, called the tariffs a 'strategic shock' threatening jobs in export hubs like engineering and textiles.
Exporters Face Immediate Fallout
U.S. clients have paused orders, with the Engineering Export Promotion Council forecasting a 20-30% drop in shipments. Shamim Azad, an exporter, told Reuters that American buyers halted production orders in mid-August, forcing some India-based factories to close. While businesses explore alternative markets, analysts warn of long-term risks to India's role in global supply chains.
