Concerns Raised Over New U.S. Tariff Policy Impacting Global Economy
Concerns Over U.S. Trade Policies
U.S. Trade Policies Pose Significant Risks
Fitch Ratings has expressed apprehension regarding the new tariff policy introduced by the U.S. President last month. The agency warns that this policy could have far-reaching consequences, potentially leading several economies into a new recession. In its March edition of the Global Economic Outlook (GEO), Fitch highlighted that the aggressive trade strategies of the U.S. have emerged as a major risk.
India's Economy to Remain Resilient
The economic growth rate of India may see a slight decline in 2026-27 compared to 2025-26. However, due to lower dependence on external demand and a strong self-reliance, the Indian economy is expected to withstand the broader impacts of the trade war. The rating agency noted that an increase in both private and public spending, including capital expenditure, has contributed to an improvement in India's GDP growth rate. This rate has risen from 5.4% in the third quarter of the current fiscal year 2024-25 to 6.2% in the fourth quarter, aided by a robust agricultural sector bolstered by above-average monsoon rainfall.
Projected Annual Loss for India
The U.S. has announced the implementation of a reciprocal tariff policy with India, set to take effect on April 2, 2025. If this occurs, India could face an annual loss of ₹61,000 crores. Amid fears of a global trade war triggered by U.S. President Donald Trump's threats of reciprocal tariffs, India is striving to find a mutually agreeable solution under the trade agreement with the U.S.
Trade Deficit Figures
Despite the newly announced tariff regulations, India has seen a significant increase in exports. In February 2025, the trade deficit narrowed to $14.05 billion, marking its lowest level in three and a half years since August 2021. Notably, this figure is substantially lower than economists' forecast of $21.65 billion. A year prior, the trade deficit stood at $41.41 billion. During this period, imports also fell to approximately $50.96 billion, the lowest level in two years, compared to $60.92 billion in February 2024.