India’s financial sector is experiencing indirect consequences as international markets respond to the uncertainties surrounding tariffs and economic policies under the Trump administration, especially through changes in currency exchange rates and liquidity circumstances.
According to a study paper by Union Bank of India, India’s economy may be protected from the full consequences of US trade tensions because of its trade balance with the US, but the ultimate impact will depend on the terms of a trade agreement between the two countries.
According to a different study, the nation enforcing the tariffs can be under more economic stress than the one that is being targeted. Reduced profit margins might result from producers partially absorbing higher production costs brought on by higher tariffs on intermediate goods.
An important part of India’s economy is its major exports to the US. US markets are crucial to industries including the all-important textile industry.
Industries like this could be greatly impacted by any changes to trade laws, such as tariffs or limitations, which would have an effect on employment and exports.
In 2024, US exports to India were about US $ 0.4 billion, while US imports of textiles and clothing from India totalled over US $ 10.8 billion.
