US effective tariff on Indian goods jumped to 20.7% from 2.4% last year: Fitch Ratings
Fitch Ratings reports a significant increase in US tariffs on Indian goods by 2025. This rise to 20.7% from 2.4% may hinder India's economic expansion. Goldman Sachs has already lowered India's growth forecasts. HDFC Bank also anticipates a GDP growth reduction. Moody's Ratings suggests potential challenges for India's manufacturing sector. However, India's economy is expected to remain resilient.
Agencies New Delhi: The US effective tariff rate on Indian goods rose to 20.7% in 2025, up from 2.4% in 2024, due to the addition of an 18.3 percentage point increase this year, according to Fitch Ratings.
The increase in tariffs poses some downside risk to India's economic growth. Overall, the US effective tariff rate is now 17%, around 8 percentage points lower than April 3 estimate, when higher reciprocal tariffs were originally announced, it said on Monday.
"The US tariff rate of 17% reflects a 15% tariff rate on EU goods, including auto and auto parts, and higher tariffs for major trading partners Brazil, Taiwan, India and Switzerland," it added.
Last week, US President Donald Trump announced 25% tariff on Indian goods, along with an unspecified additional penalty related to India's energy dealings with Russia.
Goldman Sachs on Monday cut India's economic growth forecast to 6.5% for 2025 and 6.4% for 2026, due to US tariffs. "In our view, some of these tariffs are likely to be negotiated lower over time, and further downside risk to the growth trajectory mainly emanates from the uncertainty, " it added.According to HDFC Bank, the tariff poses a downside risk of 20-25 bps to India's GDP growth. Christian de Guzman, senior vice president, Moody's Ratings, said, "Curtailed access to the largest economy globally diminishes prospects for India's ambitions to develop its manufacturing sector, particularly in higher value-added sectors such as electronics".He, however, added, "India's economy is expected to remain resilient as it is less trade-reliant than other large economies in the Asia-Pacific."
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