Speaking on US tariffs, Vidya Mahambare, Union Bank Chair Professor of Economics and Director, Research, Great Lakes Institute of Management, Chennai, said, "US tariffs, if not reversed or lowered in the next few months, will disrupt global trade since the US is a leading importer of manufacturing goods, both intermediate and final, from several countries. It will also raise consumer prices in the US, leading to a slowdown in the US economy. Consequently, economic growth in several other countries which are dependent on the US markets will slow, resulting in a loss of jobs, especially in labour-intensive sectors."
Mahambare added, "The adverse impact on manufacturing exports for India may be cushioned by the fact that India is also a major exporter of IT services to the US, which are not directly impacted. However, if the US economy slows substantially, service exports will also decline. If slowing exports lead to excess stocks in the domestic market, consumer inflation in India may slow down. Also, if global growth slows, crude oil prices may fall, lowering pressure on fuel inflation. However, potential rupee depreciation could lead to increased prices of imported items. Given that the inflation forecast is unlikely to be significantly affected upwards and there are higher downside risks to growth due to the Trump tariffs, the RBI will continue its focus on supporting growth and lowering the repo rate."
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