Additional US Tariffs Expected To Be 'Short-Lived’, India Responding Cautiously: CEA

The additional US tariffs are expected to be short-lived, India’s Chief Economic Adviser V Anantha Nageswaran said on Friday, adding that the government is treading cautiously in response to developments around the additional tariffs imposed by Washington.

“India has been responding extremely carefully with respect to developments happening in this matter. Conversations are ongoing between India and the US. The hope and intuition are that the additional tariffs India has been facing are short-lived,” the CEA said during a post-GDP media interaction.

The Donald Trump-led US administration imposed so-called reciprocal tariffs on India of 25% with effect from Aug. 7, and later added another 25% tariff from Aug. 27 to "penalise" India for its purchase of Russian crude oil. This takes the cumulative tariff to 50%.

On whether domestic consumption and anticipated GST relief would offset the impact of the tariffs, the CEA said yes and that is why the overall growth forecast for the year remains unchanged.

“Yes, we are and which is why we have not downgraded our growth estimates for the year and kept the range between 6.3–6.8%. This is despite the reciprocal/penal tariffs. After seeing the resilience in growth in Q1 and July numbers, we are maintaining the growth outlook for the full year,” the CEA noted.

On the broader implications if a resolution between the two countries— India and the US—is not achieved, the CEA said it’s difficult to estimate. “Quantitative answers are difficult to come by. It’s challenging to factor in second and third-round effects. While it’s easier to factor in growth, the value of Indian exports to the US, demand and elasticity, and some spillover effects, by nature, it’s difficult to estimate.”

The comments come as India posted a strong 7.8% GDP growth for Q1 FY26, contrary to expectations of a sequential slowdown as signaled by high-frequency indicators.