US tariffs cloud economic outlook across regions, to have impact on exports: RBI Governor

On Wednesday Reserve Bank Governor Sanjay Malhotra stated that trade tariffrelated measures have clouded the economic outlook across regions posing a risk of new headwinds for global growth and inflationSanjay stated that a global tariff war on India would negatively impact the countrys exportsMerchandise exports will be weighed down by global uncertainties while services exports are expected to remain resilient Headwinds from global trade disruptions continue to pose downward risks Sanjay Malhotra said while unveiling the first bimonthly monetary policy statement for the current financial yearGlobal uncertainties have also lowered the growth projection to 65 per cent from the earlier estimate of 67 per cent for the current financial yearWhile the risks are evenly balanced around these baseline projections uncertainties remain high in the wake of the recent spike in global volatility It may be noted that the growth projection for the current year has been marked down by 20 basis points relative to our earlier assessment of 67 per cent in the February policy Sanjay stated reported PTISanjay noted that this downward revision essentially reflects the impact of global trade and policy uncertaintiesThe recent trade tariffrelated measures have exacerbated uncertainties clouding the economic outlook across regions posing new headwinds for global growth and inflation Amidst this turbulence the US dollar has weakened appreciably bond yields have softened significantly equity markets are correcting and crude oil prices have fallen to their lowest in over three years Malhotra statedUnder these circumstances central banks are navigating cautiously with signs of policy divergence across jurisdictions reflecting their own domestic priorities according to Sanjays statementThere 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 he saidLast week US President Donald Trump announced the imposition of reciprocal tariffs on 60 countries including India effective April 9 India has attracted 26 per cent reciprocal tariff over various products including shrimp carpet medical devices and gold jewelleryAs per PTI the US has claimed that American goods face 52 per cent duty in the Indian market A new tariff policy designed to reduce the US trade deficit and boost domestic manufacturingThe US has been Indias largest trading partner from 202122 to 202324 the US was Indias largest trading partner The US accounts for about 18 per cent of Indias total goods exports 622 per cent in imports and 1073 per cent in bilateral tradeWith America India had a trade surplus the difference between imports and exports of USD 3532 billion in goods in 202324 This was USD 277 billion in 202223 USD 3285 billion in 202122 USD 2273 billion in 202021 and USD 1726 billion in 201920According to PTI in 2024 Indias main exports to the US included drug formulations and biologicals USD 81 billion telecom instruments USD 65 billion precious and semiprecious stones USD 53 billion petroleum products USD 41 billion gold and other precious metal jewellery USD 32 billion readymade garments of cotton including accessories USD 28 billion and products of iron and steel USD 27 billionImports included crude oil USD 45 billion petroleum products USD 36 billion coal coke USD 34 billion cut and polished diamonds USD 26 billion electric machinery USD 14 billion aircraft spacecraft and parts USD 13 billion and gold USD 13 billionThe 26 per cent duty is over and above the existing duty being faced by Indian goods in the USWith PTI inputsatOptionskeyd0ddb8ef8f1a62a8cdd22fac27fc5ea7formatiframeheight90width728params