New Delhi [India]: A recent report by S&P Global Ratings’ economics team has warned that the proposed tariffs by the Donald Trump administration could have overwhelmingly negative consequences on the economy.
Titled “Macro Effects Of Proposed U.S. Tariffs Are Negative All-Around,” the report highlights concerns over slower GDP growth, rising unemployment and inflation, and a stronger US dollar. While the US itself will experience some impact, the effects on its trading partners will be more severe, according to the report.
New Tariffs and Economic Uncertainty
The Trump administration has moved swiftly to introduce new tariffs, including a 25% tariff on goods imported from Canada and Mexico and an additional 10% tariff on Chinese imports.
A last-minute negotiation provided a one-month reprieve for Canada and Mexico, but uncertainty remains high regarding the future direction of US trade policy.
“Moreover, the ongoing deal-making mode of the new administration risks complicating long-term decision-making by both firms and households,” the report cautioned.
The aggressive stance on tariffs has been a key focus for the new US administration. On February 1, less than two weeks after taking office, President Donald Trump invoked the International Emergency Economic Powers Act (IEEPA) to implement sweeping new tariffs. The White House justified these measures by citing the threat posed by illegal immigration and drug trafficking, including fentanyl.
Impact on Global Trade and India’s Position
The US-China trade war has escalated further, with China retaliating by imposing tariffs of 15% on coal and LNG and 10% on crude oil imports from the United States.
However, according to government sources, the ongoing trade tensions could benefit India. While the US may take action on some Indian exports, the overall impact is expected to be positive, with India’s exports to the US likely to increase.
As the global economic landscape continues to shift, the uncertainty surrounding US trade policy is set to have far-reaching consequences.