India Indirectly Catching Heat From US Tariffs, Says UBS' Gautam Chhaochharia
While India's direct trade exposure to the US tariffs is limited, UBS warns that the indirect impact could be significant, affecting India's exporters and the broader economy.
The escalating US tariff war is adding uncertainty to global markets, and significantly impacting India through indirect channels, according to Gautam Chhaochharia, managing director and Head of Global Markets at UBS. “Any uncertainty is never good for markets because we’re still unsure how far this tariff war will go,” he said in an exclusive to NDTV Profit.
His comments come after US President Donald Trump imposed fresh tariffs on imports from Canada, Mexico, and China. The new levies, effective from Saturday, include a 25% tariff on most imports from Canada and Mexico, a 10% tariff on Canadian energy resources, and an additional 10% levy on Chinese goods. Trump justified the move, citing the failure to curb illegal immigration and the fentanyl crisis.
Chhaochharia pointed out that while India is less affected than other emerging markets in terms of direct trade exposure, the indirect impact could be significant. “If US or global growth slows down, it will impact India’s exporters and, in turn, the economy,” he said, adding that a strengthening US dollar could also weigh on the rupee.
The Indian currency reacted sharply to the developments, falling 58 paise on Monday to close at 87.195 against the U.S. dollar, compared to 86.61 in the previous session. After opening at 87.02—its weakest opening since February 2023—the rupee slid to a record low of 87.26 during intraday trade, according to Bloomberg data.
Additionally, Trump said he will “definitely” impose new tariffs on the European Union, reiterating complaints about the US trade deficit with the bloc and what he sees as insufficient EU imports of American cars and agricultural products.
