The Reserve Bank of India (RBI), in its latest monthly bulletin released on Tuesday, raised concerns about the impact of the recent trade tariff hikes by the United States on the Indian economy. The bulletin says these higher tariffs could reduce India’s exports and slow down domestic demand, affecting the country’s overall growth.
The central bank warned that the reciprocal tariffs introduced by US President Donald Trump can affect India’s net external demand.
However, while India still has some tariff advantages compared to other countries, the RBI warned that the global slowdown caused by trade tensions will likely affect domestic growth and export performance.
“There are, however, several known unknowns – the impact of relative tariffs, the elasticities of our export and import demand; and the policy measures adopted by the Government including the proposed Foreign Trade Agreement with the USA, to name a few. These make the quantification of the adverse impact difficult,” read the bulletin.
