India ‘hardly on radar screen’ in US tariff plans but global uncertainty a bigger worry: Swaminathan Aiyar

Synopsis

Swaminathan Aiyar believes India's economy will not be directly affected by U.S. tariffs targeting countries like China and Russia. However, global trade uncertainties could still impact India due to slower world GDP growth and reduced trade volumes.

As global markets grapple with growing trade tensions, Swaminathan Aiyar, Consulting Editor at ET Now Swaminathan Aiyar has downplayed concerns over the direct impact of U.S. tariff plans on India. In an interaction with ET Now, Aiyar asserted that India is "hardly on the radar screen" when it comes to Washington’s trade actions, which are largely aimed at economic heavyweights like Russia, China, and Mexico.

While Union Minister Piyush Goyal’s upcoming visit to the U.S. has sparked speculation over potential trade negotiations, Aiyar believes that the scope of such discussions remains limited.

"The idea that you can do a free trade deal is not possible," he said, explaining that any such agreement would inevitably involve "labour standards, environmental standards, various other issues, which I do not think India will be able to agree to."

Aiyar suggested that the adjustment of tariffs on both sides would be a minor issue, with India largely able to absorb any resulting shocks.

However, he warned that the bigger threat lies not in direct tariffs but in the broader economic uncertainty triggered by global trade wars. According to him, the ripple effects of deteriorating global trade relations will be felt across economies, including India, due to slowing world GDP and declining trade volumes.

"We have already seen huge uncertainty in markets of all business, but nobody knows how to plan ahead," Aiyar remarked, pointing out that a slowdown in world trade and global investments could drag India’s economy down as well.

He noted that while some analysts foresee a potential recession, he remains cautious about making definitive predictions. However, Aiyar was unequivocal in stating that "things are going to go downward," whether gradually or through a sharp market correction.

With businesses and investors grappling with heightened volatility, Aiyar’s assessment highlights the need for India to navigate global headwinds carefully.

In conclusion, while India may not be directly targeted by U.S. tariffs, its economic trajectory remains tied to the broader shifts in global trade and investment sentiment.

Also read: Calls India the best market, yet cuts exposure. What’s Christopher Wood seeing?

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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