Impact of USA Tariffs on Indian Economy.pptx

Bnnz dnd snvde snvdeb njanshhsbs hsjhfbd
Tdntygkf hn v hcjgusuvydufigusiyudharxga eb gd yr sc in DC ohh rha th sajjan dom from from frm full full

1. POLITICS OF PROTECTIONISM: HOW TRUMP’S TARIFFS AFFECT INDIAN ECONOMY? Prof. R.R.BIRADAR Registrar Central University of Karnatak , Aland Road Kalaburagi E- mail:[email protected] Presented @ Department of Business Studies School of Business Studies Central University of Karnataka, Kalaburagi October 14, 2025

2. POLITICS OF PROTECTIONISM: HOW TRUMP’S TARIFFS AFFECT INDIAN ECONOMY? Introduction Principles and Objectives of Trump’s Trade Policy Global Players of Exports and Imports Export and Import Destination of USA Trade Deficit of USA Export and Import Destination of India Impact of D-Trump’s Tariffs on Indian and USA Economy Remedial Measures Conclusions

3. Table 1:Crore Principles of Trump’s Trade Policy 2025 Trade Principles Trade Policy Country First: Central idea: Other countries should pay the same tariffs on U.S. goods as the U.S. pays on theirs. Introduced the “Reciprocal Tariff Policy’ (baseline 10% on almost all imports, with higher rates for countries running trade surpluses with the U.S.). Protectionism & National Security Tariffs used as a shield for U.S. industries (steel, aluminum, autos, energy) and as a weapon in diplomacy Linked trade directly to ‘foreign policy’, e.g., penalizing India for buying Russian oil or sanctioning Venezuelan oil trade. Deal-Making Through Pressure Tariffs are not just economic tools, but bargaining chips. Example: EU accepted a deal in July 2025 with 15% tariffs plus commitments to purchase U.S. energy and invest in U.S. markets. Unilateralism Over Multilateralism Trump sidelined WTO dispute mechanisms. Preferred bilateral deals (e.g., with the EU) and punitive tariffs until a “fair deal” was signed.

4. Objectives of USA Trade Policy 1. Promote “Fair and Balanced” Trade : If a foreign country imposes high tariffs on U.S. goods, the U.S. will impose equal or higher tariffs on that country’s goods (Correct perceived trade imbalances and “unfair” tariff structures) 2. Protect American Industries and Jobs: Aims to protect domestic U.S. manufacturers, farmers, small industries, automobiles from what Trump calls “unfair foreign competition” 3. Reduce the U.S. Trade Deficit : Aims to reduce large and persistent annual trade deficits in goods with countries like India and China 4.Use Tariffs as a Negotiation Tool: Tariffs are used not just economic protectionist measure but wean for trade negotiations: The U.S. aims to pressure countries like India to: Lower the tariffs on American goods, Remove non-tariff barriers, Open their markets for U.S. agriculture, energy, and technology exports. 5. Promote Economic Sovereignty and Nationalism: Emphasizes economic independence reducing reliance on imports and foreign manufacturing “America First” banner). 6. Control Rivals and Realign Trade Partnerships : Tariffs also use as tools to counterbalance geopolitical competitors, including those maintaining ties with Russia or China.

5. Table 2: Trump’s Tariffs Imposed on India Date and Year Tariffs Announced Donald Trump April 2, 2025 Executive order issued for reciprocal tariffs April 5, 2025: Introduced a “reciprocal tariff” policy, setting a baseline rate @ 10% August 7 , 2025 25% reciprocal tariff on Indian goods came into effect August 27, 2025 Additional 25% tariff imposed as a “penalty tariff “ as India continued imports oil from Russian oil, bringing the total U.S. tariff on many Indian goods to 50% with effect from

6. Table 3: D-Trump’s Tariffs on Major Items Product Category August 7, 025 August 27, 2025 Textiles & Apparel 25% 50% Gems & Jewellery 25% 50% Leather & Footwear 25% 50% Marine Products  33.26% 58.26% Chemicals (Organic) 25% 50% Automobiles & Auto Parts 25% 50% Iron, Steel, Aluminium 25% 50% Agricultural Products 25% 50% Machinery & Engineering Goods 25% 50% Ceramic, Glass, Stone 25% 50% Rubber Items 25% 50% Paper & Wood Products 25% 50% Furniture 25% 50% Dairy Products 56.46% 81.46% Pharmaceuticals 0% 0% Electronics & Semiconductors 0% 0% Energy Products 0% 0% Critical Minerals 0% 0%

7. Who are the Global Key Exporters?

8. Fig 1: Share of Merchandise Exports by Major Economies (%): 2024 (Global Exporting Economies)

9. Fig 2: Share of Merchandise Exports by Major Economies in (%) Source: World Bank

10. Who are Global Key Importers?

11. Fig 3: Share of Merchandise Imports by Major Economies (%): 2024 (Global Import Economies) Source: World Bank

12. Fig 4: Trends in Merchandise Imports by Major Economies (% Share in Total) Source: World Bank

13. Fig 5: Share of USA’s Imports from Top 10 Countries (%) Source: usimportdata.com

14. Table 4 : Top 10 USA Importing Items: 2024   Sl No Items   Amount (Billion US $) Share(%) 1 Electrical machinery and equipment 463.36 14.61 2 Nuclear reactors and machinery 459.19 14.47 3 Vehicles 381.03 12.01 4 Mineral fuels and oils 266.59 8.4 5 Pharmaceutical products 117.84 5.61 6 Special combined nomenclature commodities 124.97 3.94 7 Optical, medical, or surgical instruments 118.32 3.73 8 Precious stones and metals, pearls 89.54 2.82 9 Plastics and articles thereof 72.34 2.28 10 Furniture; bedding, and mattresses 69.02 2.18 Source: usimportdata.com

15. Fig 6: USA Total Trade Deficit (Billion US $) Source: World Bank

16. Fig 7: USA Trade Deficits by Major Countries (Billion US $) https://crossdockinsights.com/

17. Fig 8: USA Trade Deficits with India (Billion US $) Source: USA Census Bureau

18. India’s Exports and Imports VS US

19. Fig 9: Share of Exports from India: 2024 (Export Destinations of India) Source: Trading Economies

20. Table 5: Top 10 Tend Trading Partners of India Rank Top trading partners of India Exports ($ Billion) Imports ($ Billion) Total Trade ($ Billion) Trade Balance ($ Billion) 1 USA 71.39 46.82 118.21 24.57 2 China 13.6 90.72 104.32 -77.12 3 UAE 28.76 48.88 77.64 -20.12 4 Saudi Arabia 9.69 38.62 48.32 -28.93 5 Russia 2.8 41.56 44.37 -38.75 6 Indonesia 9.06 26.89 35.95 -17.83 7 Iraq 2.33 31.52 33.86 -29.18 8 Singapore 11 21.7 32.7 -10.7 9 Hong Kong 9.36 16.31 25.68 -6.95 10 South Korea 6.10 19.26 25.35 -13.16

21. Fig 10: India’s Total Exports to USA ($ Billion) Source: Trading Economies

22. Table 6: India’s Export to USA by Major Items: 2024  Items Exported Export Value (Billion US$) Share Electrical, electronic equipment 12.33 15.53 Pearls, precious stones, metals, coins 9.15 11.52 Pharmaceutical products 8.72 10.98 Machinery, nuclear reactors, boilers 6.48 8.16 Mineral fuels, oils, distillation products 4.38 5.52 Articles of iron or steel 2.92 3.68 Other made textile articles, sets, worn clothing 2.9 3.65 Vehicles other than railway, tramway 2.62 3.30 Organic chemicals 2.56 3.22 Articles of apparel, not knit or crocheted 2.55 3.21 Articles of apparel, knit or crocheted 2.55 3.21 Fish, crustaceans, molluscs , aquatics invertebrates 1.95 2.46 Plastics 1.62 2.04 Miscellaneous chemical products 1.24 1.56 Carpets and other textile floor coverings 1.18 1.49 Furniture, lighting signs, prefabricated buildings 1.14 1.44

23. Fig 11: India’s Import from USA (Billion US $) Source: Trading Economies

24. Fig 12: India’s Trade Surplus with USA (Billion US $)

25. Fig 13: Share of Imports to India from Major Economies: 2024 (%) Source: Trading Economies

26. IMPACT OF TRUMP’S TARIFFS ON INDIAN ECONOMY Export-driven Industries hit hard: T extiles, garments, gems and jewellery, fisheries, leather items and crafts face decline in exports, job loss. Export to US stood at $79.4 billion; 30 to 40 % it may hit the export oriented units Reduced Export Competitiveness: Indian goods are going to be less competitiveness in the US market leading to substantial decline in exports to US (Vietnam, Bangladesh and Pakistan, and other East Asian economies) Decline in Investment : Due to poor exports investment may come down in the export oriented units which more labour intensive and leading to job loss. Drop in Employment : Hit is concentrated in labour intensive sectors such Apparel/ textile, Footwear, Seafood, furniture, gems: 30-80 jobs loss per $1 million exports; For loss of $ 35 Billion export, 1-3 million lob loss

27. Fig 14: Impact on PMI Source: HSBC- Trading Economies

28. Fig 15: : Consumer Confidence Index in India Source: RBI

29. Fig 16: Impact on Inflation in India

30. Drop in GDP : India’s GDP registered at 6.5 % for 2024-25: it may come down by -0.3 to -1 % Increase in CAD : CAD of 0.5 to 1.1% of GDP; Results in modest rupee depreciation pressure Impact on Share market Withdrawal of FDI and Rupee depreciation (Rs 88.75 to Rs 89.5/USA)

31. Impact of Trump’s Tariffs on Exports and GDP

32. Trade Diversion

33. IMPACT ON USA ECONOMY Decline in Import volume and Trade diversion Reduction in Investment and Capital outflows: It d ecline due to high cost of input prices Lower growth and output : long-run GDP losses (<1% of GDP) after accounting for job Inflation : Rise in inflation due to shortage of production on account of high tariffs Burden consumers : Loss to U.S. consumers (higher prices), especially for goods with few domestic substitutes. Weakens Consumption and Affect GDP High input cost: Loss to Firms using imported inputs (higher costs → less competitive). Invite Retaliation and Reduce Export Opportunism Revenue Loss to the USA due to decline in

34. REMEDIAL MEASURES Trade Negation : Rapid trade diplomacy & carve-out WTO / legal challenge: Initiate consultation under WTO rules Temporary export rebates & liquidity : Central bank + govt offer emergency working-capital, export credit guarantees, and reduced-cost pre-shipment finance targeted to vulnerable exporters (MSMEs in textiles, seafood, gems). Targeted fiscal relief : Short-term tax deferrals, temporary duty drawback enhancements, and wage subsidies for highly affected firms to avoid mass layoffs (Reduction in GST) Trade Diversification: Accelerate trade diversification (market-by-market): EU, Middle East, ASEAN, Africa (UK and India-CETA, on July 24, 2025) Logistics & standards fast-track and Temporary public procurement Export ecosystem upgrades and Upgrade logistics & standards

35. THANK YOU Any Questions Please