Tariff Turbulence: Global Economic Impact Looms

The recent US tariff strategy could trigger a global economic slowdown, according to SBI Research. With potential retaliatory measures, world export volume may drop, impacting inflation and GDP. India faces a 26% reciprocal tariff but holds a competitive edge due to lower Asian tariffs and strategic trade shifts.

The recent announcement of broad-based tariffs by US President Donald Trump is poised to instigate a global economic deceleration, as per a report from SBI Research. The report forecasts a significant decline in world export volume to 1.3% from 2.9% in 2024, with US core inflation potentially rising by 1.4 to 2.2 percentage points.

The economic impact in the US could be severe, with GDP projected to shrink by USD 438.4 billion, or 1.45%, equating to an annual loss of USD 3,487 per household. Authored by Soumya Kanti Ghosh, Chief Economic Adviser of the State Bank of India, the report highlights potential repercussions for India amidst global volatility. India will face a reciprocal tariff of 26% starting April 9.

Though India's exports to the US comprise only 4% of its GDP, the broader global slowdown and increased financial volatility pose significant challenges. Notably, India's tariffs are lower compared to those imposed on other Asian nations such as China and Vietnam. SBI Research suggests India could capitalize on this by refining trade strategies. President Trump remains firm on tariff reciprocity, aiming for equitable trade practices worldwide. (ANI)

(With inputs from agencies.)