U.S. Tariffs on India Could Cut GDP by 0.5%, Says Chief Economic Adviser

India’s economy may face a slowdown after U.S. President Donald Trump imposed steep 50% tariffs on Indian imports, according to Chief Economic Adviser V. Anantha Nageswaran. Speaking to Bloomberg TV, he warned the duties could reduce India’s gross domestic product by 0.5% to 0.6% this year if they remain in place.

The move comes as Trump seeks to pressure New Delhi over its continued purchase of Russian oil, which he argues funds Moscow’s war in Ukraine. Last month, Washington doubled tariffs on Indian imports, intensifying trade tensions between the two nations.

India, the world’s third-largest oil importer, has defended its reliance on Russian crude, with Finance Minister Nirmala Sitharaman stating the country will continue purchases as long as they remain cost-effective.

The U.S. and India recorded $129 billion in goods trade in 2024, with the U.S. posting a $45.8 billion trade deficit, according to Census Bureau data. Export groups in India estimate that nearly 55% of the nation’s $87 billion in shipments to the U.S. could be hit by the higher tariffs, potentially boosting rival exporters in Vietnam, Bangladesh, and China.

Despite the risks, Nageswaran said India would maintain its 6.3% to 6.8% growth forecast for the fiscal year ending March 2026. He cited robust expansion of 7.8% in the April-June quarter, the fastest in over a year, as evidence of resilience in Asia’s third-largest economy.

The escalating trade dispute highlights the challenges India faces in balancing geopolitical pressures with domestic growth. While tariffs could weigh on exporters, strong domestic demand and strategic oil sourcing may help cushion the impact.