Effective Aug. 27, India faces a 50% tariff on its goods exported to the United States. And the short-term implications could be grave, according to market expert Ajay Bagga.
The immediate impact of the tariffs will be uneven, Bagga said, warning of pain that will concentrated in certain exposed sectors and firms, as well as the labour market.
“There is short-term impact, and for particular companies it will be catastrophic,” he told NDTV Profit, adding that some exporters could face bankruptcies and job losses.
The Trump administration's additional 25% punitive tariff on India for oil purchases from Russia kicked in on Wednesday. The country already faced 25% levy since Aug. 7. Indian goods are now some of the highest taxed in the world.
Ajay Bagga pegged the overall hit to output at $30–40 billion, translating into a 0.5%–1% drag on India's GDP in the near term. He argued that the tariff level is commercially unsustainable for most exporters. “No exporter can operate with a 50% margin."
He projected the gross impact “could go as high as $60 billion next year,” but stressed that the situation is unlikely to remain static. “Things will change before next year. There will be measures taken."
Bagga added that some trade will be re-routed to other destinations, while part of the export pipeline could be absorbed by domestic consumption. “Alternatives will come up."
From a geopolitical standpoint, Bagga said that the US is "weaponising tariffs to get to Russia via India", adding that the Indian delegation was not at fault for the US imposing 50% tariffs.
Watch the conversation here:
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