The tariffs introduced under US President Donald Trump’s administration could drag down India’s economic growth by as much as half a percentage point, finance secretary Seth said.Speaking in Washington, Seth said the measures may shave off between 0.2 to 0.5 percentage points from GDP growth.
“Now there is a sign of that… we grow about 6.5% in the current year,” Seth said during a Hudson Institute event held alongside the Spring Meetings of the International Monetary Fund and World Bank.
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He added that the indirect consequences could prove more damaging. “Second order (effects) would be important,” he said, as quoted by news agency Reuters.
While he remained optimistic about India’s potential to reach a 7% growth rate in the next decade, Seth said that the country needed to grow faster in order to meet its long-term development goals. He also confirmed that an Indian delegation was in the US for trade talks, although he did not disclose which officials they would be meeting.
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The warning comes amid a broader downturn in global trade. The World Trade Organisation (WTO) forecasts that goods trade will fall by 0.2% in 2025 due to shifting US trade policies and mounting tensions with China. If Trump follows through on his most severe “reciprocal” tariffs, the WTO said trade could slump by 1.5% worldwide. North America is expected to be among the hardest hit, with exports set to fall by 12.6% and imports by 9.6%.
Although Trump recently granted a 90-day pause on his toughest tariff plans, uncertainty continues to weigh heavily on global business. “The enduring uncertainty threatens to act as a brake on global growth,” said WTO Director-General Ngozi Okonjo-Iweala. WTO chief economist Ralph Ossa echoed the concerns, warning that “tariffs are a policy lever with wide-ranging and often unintended consequences.”
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In a possible breakthrough, US Treasury Secretary Scott Bessent indicated that India may soon finalise a bilateral deal with Washington to sidestep the steep 26% tariff currently paused until July 8. India, like many other countries, is currently subject to a 10% tariff under existing US policy. Bessent expressed optimism, saying India was close to a deal as it had “fewer non-tariff trade barriers” and “very little government subsidies.”
US Vice President JD Vance, during a visit to Jaipur earlier this week, urged India to ease trade barriers and open up more to American goods, particularly energy and defence exports.
