President Donald Trump's New Tariff Policy Could Cause $3.1 Billion Loss to India Annually - CareEdge Ratings

President Donald Trump's New Tariff Policy Could Cause $3.1 Billion Loss to India Annually - CareEdge Ratings

New York, April 2, 2025 — A report from CareEdge Ratings states that U.S. President Donald Trump's new tariff plan could cause a loss of $3.1 billion, or 0.1% of India's GDP. The tariff plan will have a limited impact on India's exports but is expected to have only a minor effect on the country's overall GDP.

Trump has announced that his "reciprocal" tariff system will begin on Wednesday. Although he has repeatedly accused India of imposing high tariffs, the direct impact of these new tariffs on the Indian economy is expected to be limited. Furthermore, discussions are ongoing between India and the U.S. regarding a bilateral trade agreement, and India has made several concessions to Trump to avoid tariff hikes.

According to the CareEdge Ratings report, if Trump imposes an 8% differential tariff on Indian exports, this could result in a total loss of $4 billion, including a 4% depreciation of the Indian rupee. However, based on pricing and classification of exports, this loss is estimated to be $3.1 billion.

CareEdge's Director, Smita Rajpurkar, said, "We have made a simple estimate that if the U.S. imposes an 8% tariff on all products from India and the rupee depreciates by 4%, this would somewhat mitigate the tariff impact. We also assume that the U.S. demand elasticity for Indian exports is 1."

Additionally, Trump had planned to impose tariffs on a country and product basis, but some reports indicate that he is now considering implementing a comprehensive tariff system.

So far, Trump has already announced a 25% tariff on cars, steel, and aluminum. He has also imposed a 20% tariff on China in two phases and a 25% tariff on Canada and Mexico. He expects to generate $6 trillion in revenue from these tariffs annually.