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‘Reciprocal tariff is white noise’: SBI Research estimates tariff impact on India’s exports to US
In a report, SBI Research estimated that US tariffs would have a minimal impact on Indian goods and services. According to the data, India exports over 17 per cent of its total goods and services to the US.
United States President Donald Trump's reciprocal tariffs on India are likely to turn out to be “white noise” rather than a major impact on Indian exports, according to an SBI Research report.
While the Trump administration's move is significant for trade relations between the US and India, “tariff reciprocity may turn out to be more of white noise”, as per the research report.
Also Read | India’s exports surge to $74.97 bn in Jan 2025 from $68.33 bn, trade deficit rises to $2.67 bn
The report estimated that the overall US-imposed incremental tariff levels of 15 to 20 per cent would limit the impact on exports to the US in the range of 3 to 3.5 per cent, which can be squared off by higher export goals of India.
Highlighting the focus of India's exports on other regions, the report also mentioned the emergence of alternate areas and newer routes, which range from Europe to the US via the Middle Eastern nations, which will provide a new supply chain route to foster “strategic inclusivity”.
“We believe the flexibility shown by the leadership/policymakers should reduce the overall incremental tariff levels close to 15-20% and that would limit the impact on exports in the range of 3-3.5% which again should be negated through higher export goals across both manufacturing and services fronts,” said the research report.
India-US trade relations
According to SBI trade data, India's total trade exports to the US were $87.41 trillion for the calendar year ended 2024, compared to $83.68 trillion in the previous year. The United States' exports to India were at $41.75 trillion in 2024, compared to $40.37 trillion in the previous year.
Looking at the tariffs front, the US tariffs on India have increased from its 2.72 per cent level in 2018 to 3.83 per cent level in 2022, according to the SBI data.
India also has imposed high tariffs on the import of US goods. The tariffs have increased from their 11.59 per cent level in 2018 to 15.30 per cent level in 2022.
“While US tariffs on Indian exports have remained relatively stable, India's tariff adjustments appear to be more dynamic,” according to the research report, which highlights how both nations have adjusted their tariff structures over the years.
The US serves as one of the top destinations for Indian exports, which make up for 17.7 per cent of its total exports as of the financial year 2023-24 data.
What are Reciprocal Tariffs?
Reciprocal Tariffs is a move from the US government which highlights the Reciprocal Tariff Act which was designed to provide power to the President of the United States to negotiate or place tariffs or trade restrictions on countries in response to an action taken.
This tariff move is meant to balance trade relations between the two nations. If one nation hikes tariffs on the other, the latter can choose to raise its tariffs on goods traded between the two.
Reciprocal tariffs can also fuel a trade war, which will increase trade barriers between two nations that actively trade in goods and services.
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Business NewsEconomy‘Reciprocal tariff is white noise’: SBI Research estimates tariff impact on India’s exports to US
First Published:17 Feb 2025, 10:02 PM IST
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