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The nature of broad-based tariffs announced by US President Donald Trump and potential retaliation by other countries is likely to initiate a vicious cycle of global growth, says a report by SBI Research.
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. (ANI)
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