20% US tariff may cause 50 basis points loss to India's GDP, claims SBI report
SBI: The State Bank of India report states that if the US imposes a 20 percent reciprocal tariff on India, it may cause a loss of 50 basis points (BPC) to India's gross domestic product (GDP). Let's find out what the report says further.
The US has made the announcement of reciprocal tariffs on its trading partners. India has also been alarmed by this. India has been a significant trading partner of the US and has higher tariffs on American goods than the US. Therefore, there has been an increase in the likelihood of the US implementing reciprocal tariffs on Indian goods. The big question remains what value of the tariff did the US announce on Indian goods. The State Bank of India has discussed the impact of US tariffs on Indian goods in one of its reports.
The State Bank of India report said that if the US imposes a reciprocal tariff of 20 percent on India, it could lead to a loss of 50 basis points (bps) to India's gross domestic product (GDP). However, the report also stressed that the probability of this happening is very low. SBI has said, "The simulated effect of a 20 percent flat tariff on Indian exports would result in a loss of 50 bps to GDP". The biggest impact of this tariff will be on businesses related to sectors such as agriculture, hunting, forestry, and fisheries. These sectors may suffer an estimated loss of US $ 1,543.4 million.
Talking about the financial sector, this sector may suffer a loss of US $ 1,426.9 million as a result of US tariffs. After this, the sector related to chemicals and chemical products may suffer a loss of US $ 1,106.5 million and the sector related to textile products may suffer a loss of US $ 1,076.0 million. Other sectors affected by US tariffs include base metals and fabricated metals (potential loss of USD 804.7 million) and mining and quarrying (potential loss of USD 512.4 million).
The report states that such tariffs will have a significant impact on India's export-driven sectors. This is why India and the US have engaged in several rounds of trade discussions to resolve tariff disputes and increase bilateral trade. The report also states that the US tariff rate on Indian goods increased from 2.72 percent in 2018 to 3.91 percent in 2021. It will decrease slightly in 2022 and fall to 3.83 percent. India's tariff on US imports has increased from 11.59 percent in 2018 to 15.30 percent in 2022.
