USA & indian economy @Tarrrif

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No, US tariffs on Indian goods do affect the Indian economy, though the overall impact is moderate and contained rather than catastrophic, due to the structure of India's trade and ongoing resilience in exports.
In 2025, the US under President Trump imposed high tariffs on most Indian goods: starting with a 25% reciprocal tariff, followed by an additional 25% penalty linked to India's Russian oil imports, resulting in up to 50% total duties on affected products effective from August 2025. These remain in place as of December 2025, with negotiations ongoing for a potential interim deal.
Key Impacts
Affected Exports — The US is India's largest goods export market (about 18-20% of India's merchandise exports, worth ~$86-87 billion annually pre-tariffs). Tariffs hit labor-intensive sectors hard, including textiles, apparel, gems and jewelry, leather, marine products (e.g., shrimp), and some chemicals/auto parts. Estimates suggest $48-50 billion in exports are directly threatened, leading to reduced competitiveness against rivals like Vietnam, Bangladesh, and Mexico (which face lower duties).
Economic Effects — Analysts (e.g., Moody's, UBS, ICRIER) project a 0.3-0.8 percentage point drag on India's GDP growth for 2025-26. Export drops in affected sectors: e.g., 10-15% decline in textiles/garments in late 2025. Job risks in export hubs (e.g., Gujarat for diamonds, Tamil Nadu for textiles), affecting MSMEs. Rupee weakening, stock market volatility, and capital outflows earlier in the year.
Exemptions and Buffers — Key sectors like pharmaceuticals (major generic drug supplier to US), semiconductors/electronics, and some energy products are largely exempt. Services exports (IT, software—worth over $200 billion annually) are unaffected. India's domestic-driven economy (exports ~20% of GDP, US goods exports ~2%) limits broader damage.
Recent Resilience
Despite tariffs, India's overall merchandise exports surged 19.4% in November 2025 (fastest in over 3 years), with shipments to the US up ~22% that month, driven by engineering goods, electronics, and diversification (e.g., to China, UAE). Trade deficit narrowed, and GDP growth remained strong (e.g., 8.2% in one quarter). India is pushing diversification, government support for exporters, and trade talks—officials say an interim framework deal to lower tariffs is "very close."
In summary, the tariffs do hurt specific export sectors, jobs, and growth marginally, but India's economy is not heavily dependent on US goods trade, and buffers like services/domestic demand mitigate severe effects. Negotiations could ease pressures soon.

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