(Bloomberg) -- India’s economy will likely take only a marginal hit from Donald Trump’s proposed tariff hikes on all countries, according to Bloomberg Economics, as the US presidential candidate ratchets up his trade warnings to the South Asian nation.
India’s gross domestic product will be 0.1% lower by 2028 if Trump is re-elected in November and goes ahead with a plan to impose a 60% tariff on Chinese goods and 20% tariffs on other countries, Bloomberg Economics estimated. The decline would come from the slump in global trade induced by the tariffs and India’s weaker competitiveness compared with its peers, economists Abhishek Gupta and Eleonara Mavroeidi said in a report Friday.
Trump has vowed to take reciprocal action against countries like India for imposing high tariffs on American goods. On Thursday, he accused India of being the “biggest charger” of tariffs, citing the example of India’s import taxes on Harley Davidson Inc., which he’d previously complained about during his first term in office.
In 2019, Trump terminated India’s designation as a developing nation that allowed the South Asian country to export thousands of products to the US duty-free. New Delhi retaliated by imposing higher tariffs on several products. The US was India’s largest trading partner last year, with bilateral trade of about $127 billion.
Even so, Trump remains complimentary of Prime Minister Narendra Modi. Earlier this week, he called Modi a friend and the “nicest human being.”
Bloomberg Economics said India can offset the impact of Trump trade barriers by boosting manufacturing subsidies and reducing average import tariffs. The combined effect of a 4% production incentive and 1 percentage-point cut to import tariffs would be a 0.5% increase in GDP above the base base, the economists estimated.
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