US investment group Goldman Sachs on Thursday said that the steep 50 per cent tariff on imports from India could reduce the country’s real GDP growth by around 0.6 percentage point (PP).
“We had previously estimated a potential direct impact of around 0.3 percentage point (annualized) to India’s real GDP growth, following President Trump’s surprise announcement of a 25 per cent tariff on Indian imports,” the US investment group said.
If the new additional duty (including exclusions) is enforced, then that would constitute a potential incremental drag of around another 0.3 percentage point (annualized), Goldman Sachs said. “This estimate is based on India’s goods exports exposure of roughly 4 per cent of GDP to US final demand and a goods export demand elasticity of 0.5 as referenced in the IMF study. There are indirect impacts on real GDP growth through trade-related uncertainty as well, as we had written earlier,” it said.
Amid the global uncertainty, the RBI on Wednesday retained its annual and quarterly real GDP growth forecasts for 2025-26 at 6.5 per cent for April-June 2025, 6.7 per cent for July-September 2025, 6.6 per cent for October-December 2025, and 6.3 per cent for January-March 2026
Goldman Sachs has estimated the total effective US tariff on Indian imports would be around 32 per cent after all exemptions.
However, the firm stated that it will wait for 20 days before deciding whether to revise its GDP forecast for India. “We see downside risks to our growth estimates for both CY25 and CY26, but are not making any changes to our growth forecasts at the moment, given that there is a three-week window for negotiations until the new incremental tariffs come into effect,” Goldman Sachs said. Here CY denotes calendar year.
US President Donald Trump through a White House executive order announced an additional 25 per cent “ad valorem” duty on Indian goods imports, effective August 27, which will take the total tariff levy on Indian imports to 50 per cent. The executive order said that this “ad valorem” duty is owing to India’s continued energy purchases from Russia.
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The additional “ad valorem” duty will not apply to commodities included in Sec. 232 of the Trade Expansion Act of 1962.
In response, the Ministry of External Affairs, Government of India in a statement reiterated that the government “will take all actions necessary to protect its national interests”, it said.
The US accounts for around 4 per cent of India’s crude oil imports, while Russia accounts for a third: The US accounted for around 4 per cent of India’s crude oil imports (in volume terms) in 2024-25, increasing from around 3 per cent in 2023-24, while Russian imports constitute around a third of Indian oil imports. In April and May 2025, the US accounted for 8 per cent (on average) of India’s crude oil imports, the US firm said.
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