US tariffs on the horizon: How will India’s economy be affected?

Pal, Barun Deb; and Ajmani, Manmeet Singh. 2025. US tariffs on the horizon: How will India’s economy be affected? Policy Note January 2025. Washington, DC: International Food Policy Research Institute. https://hdl.handle.net/10568/172451

US trade policy is expected to change significantly under the new administration, with an anticipated average tariff increase of 10 to 20 percentage points on all imports.1 Tariffs as high as 100 percent may be imposed on imports from select countries to address trade imbalances and to boost domestic manufacturing in the United States. India is one of the countries that may be significantly impacted by this policy change. Total merchandise trade between India and the United States increased rapidly in the past decade, rising from US$53 billion in 2014 to US$78 billion in 2022 (World Bank, 2024). The United States became India’s top trading partner in 2022, accounting for 11 percent of India’s total trade. India, in turn, accounts for around 2.5 percent of the total US trade.