How Do Trump’s Tariffs Create New Challenges for India’s Slowing Economy?

The Indian economy, already experiencing its slowest growth tracking for four years but now comes under a new cloud with tariffs that have been put on by America. Announced just before Prime Minister Narendra Modi’s visit to the White House, reciprocal tariffs from President Donald Trump add to defining uncertainty in India.

India’s trade surplus with the US and ongoing negotiations on this imbalance might yield further concessions that could painfully annoy its economy. Higher tariffs on steel and some other exports threaten India’s export driven industrial sector while potential commitments to buy military equipment, oil and gas from the US might further aggravate the challenges faced by Indian finances.

The tariffs come at a time when India is struggling with low demand and a high unemployment rate. The government has introduced a series of measures such as income tax relief and a cut in the central bank’s benchmark interest rate. However, these are seen as essentially superficial. There has not been any mention from economists that the main problems are actually about deeper structural mismatches, joblessness and rising inequalities.

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With domestic consumption driving India’s economy more than exports, new US trade barriers could affect critical industries while further narrowing down pathways for foreign investment. However, they insist that India must strive for a broader change for the economy if these challenges cut into its earnings are to be addressed in order to keep it afloat amid global trade uncertainties.