Has PM Modi Triumphed Over Donald Trump’s Reciprocal Tariff Pressure? Check Moody’s Report

Reciprocal Tariff: US President Donald Trump is set to impose Reciprocal Tariffs on India and several other countries from April 2, 2025. This move is expected to increase the prices of key imports like petroleum crude, gold, and electronic components. While some fear that this could trigger a global trade war, a recent Moody’s report suggests that India is in a stronger position than other nations.

With a resilient domestic economy and low dependence on US exports, India appears less vulnerable to Trump's tariff pressure. The big question now is—Has PM Modi successfully countered this challenge?

What is Reciprocal Tariff and Its Impact on India?

Under the Reciprocal Tariff policy, India will match the tariffs the US imposes on Indian exports. As a result, the prices of several important commodities are expected to rise sharply, including:

• Petroleum crude
• Gold
• Petroleum products
• Electronic components
• Coal
• Coke and other essential imports

Despite these concerns, Moody’s report presents a different picture, indicating that India’s economy is strong enough to handle these changes without severe disruptions.

Moody’s Report: Why India is Less Affected by US Tariffs

According to Moody’s, India will remain the fastest-growing economy in the G-20, with a projected GDP growth of 6.5% in 2025-26. The report highlights key reasons why India is less impacted by US tariffs compared to other nations:

• Low Export Dependence on the US – Only 2% of India’s GDP comes from exports to the US, making India less reliant on American trade.
• Low External Debt – India’s external debt-to-GDP ratio is just 19%, reducing its financial vulnerability.
• Monetary Policy Support – The Reserve Bank of India’s (RBI) easing policies and inflation control measures have created a stable economic environment.

Apart from this, Moody's stated, "Large, diversified and domestically driven emerging market economies like India and Brazil are better equipped than smaller peers to attract capital and withstand cross-border outflows. These two economies also have deep domestic capital markets and low external vulnerability indicators."

What is the Final Outcome of India-US Trade Talks?

Despite the Reciprocal Tariffs, India and the US are actively engaged in trade talks. Reports suggest that India is considering reducing tariffs on American goods, which could lead to the US lowering tariffs on Indian products in return.

Earlier, Donald Trump claimed that India is open to reducing tariffs, which could encourage the US to reciprocate with tariff relief. However, no official confirmation has been made yet. The final outcome of these negotiations remains uncertain, but India’s strong economic position gives it a strategic advantage.