'US Tariffs May Reduce India's GDP' and Home Sales Decline in Delhi and 8 Other Cities

However, Barclays noted that the Indian economy, driven by domestic demand, is unlikely to face a widespread impact from this tariff hike.US President Donald Trump announced on Wednesday that a 25 per cent customs duty on Indian products will be imposed in the US starting August 1.

Additionally, he announced penalties on India for purchasing oil and gas from Russia.According to Barclays, if this tariff hike takes effect from August 1, the average effective tariff rate on India's exports to the US, in trade-weighted terms, will rise to 20.6 percent.

This rate is significantly higher than the 2.7 percent before April 2, 2025, and the 11.6 percent applied during the 90-day period when higher tariffs were deferred.

Barclays stated, "The relatively closed nature of the Indian economy and its reliance on domestic demand shield it from major shocks. We believe the impact of the 25 percent tariff will be limited, with a potential effect on GDP growth of up to 0.30 percent."

Alongside this, Barclays expressed hope that ongoing trade negotiations between India and the US could lead to a reduction in the final tariff rate below 25 percent in the future.

The Reserve Bank of India has projected a growth rate of 6.5 percent for the current financial year, equal to the previous year. The International Monetary Fund and the Asian Development Bank have forecasted growth rates of 6.4 percent and 6.5 percent, respectively.