Key Points
US tariffs could reduce global export volume to 1.3 percent
SBI predicts potential USD 438.4 billion GDP decline
India faces 26 percent reciprocal tariff from April 9
Global financial volatility expected to intensify
The world export volume may decline significantly to 1.3 percent from 2.9 percent in 2024. This will also impact the US core inflation, which may go up by 1.4 percentage points to 2.2 percentage points.
The report adds that US GDP may decrease by USD 438.4 billion, or 1.45 percent, and GDP per household will decrease by USD 3,487 per year.
The report, authored by Soumya Kanti Ghosh Group, Chief Economic Adviser, State Bank of India, adds that the overall global growth slowdown and heightened global financial volatility will have a greater impact on India. India faces a reciprocal tariff of 26 percent from April 9.
"India's exports to the US is only 4 per cent of GDP, so direct impact appears limited though collateral impact from overall global growth slowdown and heightened global financial volatility will take a toll going ahead...," the SBI Research report read.
Another positive aspect is that the tariff levied on India is the lowest among its Asian peers (34 percent + 20 percent on China, 36 percent on Thailand, 32 percent on Indonesia, 46 percent on Vietnam, etc.).
SBI Research expects India to have a competitive advantage by structurally adjusting its trade drivers, value addition and proliferation.
Since assuming office for his second term, President Trump has reiterated his stance on tariff reciprocity, emphasising that the United States will match tariffs imposed by other countries, including India, to ensure fair trade.
Comments:
This trade war situation is getting out of hand. While I understand the need for fair trade, these escalating tariffs hurt everyone in the long run. The numbers in this report are quite alarming - $3,487 per household is significant! 😟
At least India has the lowest tariff among Asian countries. This could be an opportunity for our manufacturers to become more competitive globally. The focus should be on increasing value addition as the report suggests.
I think the article could have explored more about how this might affect job markets in both countries. The GDP numbers are important, but what about employment? Also, is anyone else worried about inflation creeping up?
History shows that trade wars never benefit anyone. The 1930s Smoot-Hawley tariffs worsened the Great Depression. Hope policymakers learn from past mistakes before it's too late! 🤞
While I appreciate the data in this report, I wish it had more concrete suggestions for how India can adjust its trade drivers as mentioned. The competitive advantage angle is interesting but needs more elaboration.
The silver lining here is that India's exposure is relatively small (only 4% of GDP). This might be the wake-up call we need to diversify our export markets and reduce dependence on any single country. #MakeInIndia
