NEW DELHI– The fresh round of 25 per cent tariffs on Indian goods, imposed by the United States on Wednesday, is expected to not only hit Indian exporters but also weigh on the U.S. economy by slowing growth and stoking inflation, according to a report by SBI Research.
The study estimates that the tariffs could reduce U.S. GDP by 40–50 basis points as higher import costs ripple through key sectors including electronics, autos and consumer durables. Inflation, the report said, is now expected to stay above the Federal Reserve’s 2 per cent target through 2026, fueled by tariff-related supply shocks and currency movements.
“The U.S. is beginning to show signs of renewed inflationary pressure, driven by the pass-through effects of recent tariffs and a weaker dollar,” SBI Research noted.
The warning comes as Federal Reserve Chair Jerome Powell acknowledged in Jackson Hole that the impact of tariffs on prices is “now clearly visible.” He pointed to rising wholesale costs, with the Producer Price Index up 3.3 per cent year-on-year in July — the sharpest increase in more than three years. Tariff-heavy imports like furniture and apparel saw some of the steepest hikes.
U.S. wholesale prices surged nearly 1 per cent in July alone, underscoring what economists call the “hidden tax” of trade restrictions. Analysts caution that unless tariffs are rolled back, American households will face mounting pressure on their budgets.
The Department of Homeland Security earlier circulated a draft notification confirming the new 25 per cent duty on Indian goods, citing “threats to the United States by the Government of the Russian Federation.” The levy comes on top of an earlier 25 per cent tariff, though some items, such as electronics and pharmaceuticals, have been exempted. (Source: IANS)
