50% tariffs on Indian exports to the U.S. will reduce demand ‘very substantially’: Moody’s Analytics

The combined 50% tariff on Indian exports to the U.S. will reduce demand for Indian goods “very substantially”, Moody’s Analytics said in a report. 

The report was talking about the combined effect of the ongoing 25% tariff on Indian imports imposed by U.S. President Donald Trump, as well as the secondary tariff of 25% he imposed for India’s economic dealings with Russia, which are set to come into force on August 27. 

“India has experienced a sudden deterioration in its relations with the U.S. and has been threatened with 50% tariffs, a rate that will reduce demand for Indian goods very substantially,” the report said.

It added that the tariffs imposed by the U.S. have left countries across Europe and the Asia-Pacific region “feeling bruised” since the U.S. is the largest trading partner for most of them, and a decline in sales to their largest customer “will hurt”. 

“Some firms in these countries may be willing to slash prices to maintain volumes, but this will affect firm performance through lower margins, a squeeze on wages and investment,” Moody’s Analytics added. 

“Given that we now expect tariffs to remain in place for the remainder of Trump’s presidency, the drag on growth, particularly on investments and exports, will be notable,” it said.