India-US trade: Experts warn of GDP hit due to Donald Trump tariffs; pharma, auto sectors may take a hit

India’s economy could take a hit from the United States’ decision to impose a 25 per cent tariff on all Indian goods starting August 1, alongside an unspecified penalty for its purchases of Russian oil and military equipment. As per news agency PTI, trade and policy experts said the move could hurt key export sectors and impact the country’s GDP, though a pending trade agreement offers hope for relief.US President Donald Trump made the surprise announcement just a day after Indian officials confirmed a US delegation was scheduled to visit India on August 25 to finalise a broader trade deal. The Indian government responded by saying it had “taken note” of the development and was “studying its implications.” It added that India remained committed to concluding a “fair, balanced and mutually beneficial” trade agreement with the US.Economists flagged potential pressure on GDP if the tariff remains in place. ICRA chief economist Aditi Nayar was quoted by news agency PTI as saying that “The tariff (and penalty) now proposed by the US is higher than what we had anticipated… it is likely to pose a headwind to India’s GDP growth.”Pharmaceuticals, marine products, textiles, leather, and automobiles, where India has strong trade links with the US, are expected to be most affected. As per PTI, Garima Kapoor of Elara Capital noted that the inclusion of pharma in the tariff bracket would be especially damaging, as the US accounts for more than 30% of India’s pharma exports.Agneshwar Sen of EY India pointed out that “both countries remain positively engaged in active negotiations,” adding that he hoped the dispute would be settled through a “mutually beneficial” agreement.According to Grant Thornton Bharat’s Rishi Shah, while such developments were anticipated amid tensions around Russia-Ukraine, “markets consistently demonstrate remarkable adaptive capacity” and India’s multi-alignment strategy would help it cope with the new challenges.Analysts noted that India’s 25% tariff rate puts it at a disadvantage compared to peers like Vietnam or Indonesia, which have lower rates ranging between 15% and 20%. Rahul Ahluwalia from the Foundation for Economic Development said India will be “worse off” against such competitors unless it reaches a new deal quickly.Medical Technology Association of India chairman Pavan Choudary called Trump’s announcement “economically shortsighted and strategically misguided,” and warned against “punishing” India’s sovereign defence and energy choices through “coercive trade measures.”Choice Broking’s Utsav Verma said the move could dent investor sentiment in key sectors in the short term, but he remained optimistic about the prospects of a final agreement. “We believe that the trade deal will eventually follow, provided both nations show the necessary political will.”