{"id":"f-993d06a2ab-c8fef770-b4a2-5899-877b-6a827153461f","title":"EXCLUSIVE | Can Indian economy withstand tariff shocks? Economists weigh in","description":"India defied global trade shocks in 2025, but economists caution Trump’s tariffs may hit with a lag, raising inflation risks and testing growth resilience in 2026.","timestamp":1765889419,"category":"business","headline":"EXCLUSIVE | Can Indian economy withstand tariff shocks? Economists weigh in","modifiedHeadline":"Will India's economy survive tariffs?","subCategories":["scid_edbc7f13"],"region":"IN","bundleMetaData":{"bundleId":"7b48871c-c993-4956-b43d-6f46f8e1b036","bundleTitle":"Today In India","cardData":null},"iabCategoryId":"88","fcSummary":"In 2025, Trump's policies strained India-US relations, but India's economy showed resilience. Economists debate if this is structural or temporary, noting tariffs and global shifts. Initial buffers may fade in 2026, potentially impacting trade, inflation, and India's economic strength.","summary":"Economists warn: Trump's tariffs threaten India's economy in 2026, potentially spiking inflation and challenging growth resilience.","ctaUrl":"https://trends.glance.com/newz/Economy/IN/en/et-now/f-993d06a2ab-c8fef770-b4a2-5899-877b-6a827153461f","sourceUrl":"https://www.etnownews.com/economy/exclusive-can-indian-economy-withstand-tariff-shocks-economists-weigh-in-article-153300624","bannerImage":"https://g-mob.glance-cdn.com/public/fc/image/a4a8_akPRKi0.webp","content":"

\n $\"exclusive$ \n

The year 2025 upended long-held assumptions about global trade, geopolitics and economic alliances. Donald Trump’s return to power in the United States

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brought a sharp shift in trade policy, strained India–US relations and unsettled markets across the world. Yet, against expectations, India’s economy held up far better than feared, raising a critical question for investors and policymakers alike: is this resilience structural, or is the real pain merely being postponed? This was the central theme of a wide-ranging discussion between noted economists Swaminathan and Aurodeep Nandy, who examined how tariffs, global fragmentation and shifting power equations could shape India’s outlook in 2026. Trump’s aggressive trade stance has redrawn the global economic map. Import duties on Indian goods are now among the highest imposed by the US, undermining the narrative of a close strategic partnership between New Delhi and Washington. The focus of US policy, the economists noted, appears to have shifted decisively towards pressuring Russia on oil and reshoring domestic industries, even at the cost of alienating long-standing partners such as India. At the same time, China has been deploying rare earth supplies as a strategic lever, reinforcing the idea that the world is fragmenting into competing economic blocs. Trust between nations has eroded, and trade is increasingly being shaped by political considerations rather than efficiency. Despite these headwinds, India and several other economies surprised on the upside in 2025. Global growth did not collapse when tariffs were announced, US inflation remained contained, and the Federal Reserve even began cutting interest rates. Markets that initially braced for a severe shock instead found a temporary equilibrium. According to the economists, several factors helped cushion the blow. Effective tariff rates in the US ended up being lower than the headline numbers, settling in the range of 11–20%. India managed to reduce its own tariff exposure to around 20 per cent. Transshipment also played a role, with Chinese exports finding alternative routes through countries such as Vietnam and Indonesia to reach US markets. Another key support came from front-loading of trade. Companies accelerated shipments ahead of tariff deadlines, temporarily boosting trade volumes and keeping prices in check. In addition, sustained investment flows into India, particularly in technology and artificial intelligence, from global giants like Amazon, Google and Microsoft, helped underpin domestic growth. However, the economists cautioned that these buffers may not last. The very forces that muted the impact in 2025 could reverse in 2026. As front-loading fades, trade volumes may slow and prices could rise more sharply. Importers who initially absorbed higher costs may begin passing them on to consumers, pushing inflation higher, especially in the US. The belief that tariffs are a tax on foreign producers, they argued, is fundamentally flawed. In reality, tariffs ultimately burden domestic consumers and businesses. If these costs feed through fully next year, the delayed shock could test both global growth and India’s economic resilience more severely.

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\n \n https://www.youtube.com/watch?v=Uq3muOa_DTs\n \n

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\nAs 2026 approaches, the debate underscores a growing consensus: India’s performance so far has been impressive, but the true test may still lie ahead.\n

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EXCLUSIVE | Can Indian economy withstand tariff shocks? Economists weigh in

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