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The Organisation for Economic Cooperation and Development (OECD) announced on Tuesday (June 3) that global economic growth had slowed more than expected a few months earlier, following US President Trump’s tariff announcements.
In its latest Economic Outlook, the OECD estimates that the global economy will slow down from 3.3% in 2024 to 2.9% in both 2025 and 2026. It had previously forecast growth of 3.1% for 2025 and 3% for 2026. The organisation also cautioned against rising protectionist tendencies globally, which it said would add to inflationary pressures, as well as the overall uncertainty of future trade barriers, which could further dampen global economic growth.
The OECD projects that India will experience “strong and broadly stable” economic growth, with real GDP estimated at 6.3% in FY2026 and 6.4% in FY2027. According to the organisation, the prospect of benign inflation, tax cuts and a stronger labour market will help to boost private consumption, while falling interest rates and increased public capital spending will help boost investment. However, US tariffs would make Indian exports expensive.
US rejects India’s metals tariffs challenge at WTO
The Indian Express reported on Tuesday that the US has dismissed India’s notice at the World Trade Organization (WTO) proposing retaliatory action against the US for the Section 232 tariffs on imported steel and aluminium.
On May 9, India submitted a document to the WTO, identifying the American metals tariffs, effective from March 12, as “safeguard measures”. The WTO’s Agreement on Safeguards (AOS) identifies safeguards as protectionist measures that a member country may invoke if it determines that certain product imports are significantly large and may “cause or threaten to cause serious injury” to the corresponding domestic competitor.
According to India’s note, the tariffs impact $7.6 billion worth of Indian exports into the US, on which $1.91 billion would be collected as duties. India’s proposed retaliatory measure would result in an equivalent amount of duty collected from products originating in the United States,” it said. The specific US products were not specified.
In its response to the WTO on May 23, the US said that India’s contention that the tariffs are ‘safeguard measures’ is incorrect, that the Section 232 tariffs were imposed on national security grounds, and even claimed that India had not followed due procedure in seeking negotiations on the subject.
India-US closer to trade deal: Lutnick
This development comes amidst US Commerce Secretary Howard Lutnick’s remarks on Monday, expressing optimism about a US-India trade deal. He said that trade negotiators have “found a place that really works for both countries.”
“You should expect a deal between the United States and India in the not-too-distant future,” he said at the US-India Strategic Partnership Forum’s Leadership Summit in Washington.
We have previously explained how India will be affected by Trump’s tariffs: the US is India’s largest trading partner, while India is the US’s 10th-largest trading partner. The US maintained a trade deficit of $45.7 billion with India in 2024, up 5.4% from 2023, according to the Office of US Trade Representative (USTR).
India currently faces 26% “reciprocal tariffs” under the International Emergency Economic Powers Act (1977). The US subsequently paused all reciprocal tariffs on April 9, while a legal battle over the validity of these tariffs (as well as the 10% baseline tariff charged on all countries) is currently underway.
The White House justified this rate, saying India charges a 70% tariff on passenger vehicle imports, 10-20% on networking switches and routers and 50% on rice in the husk.
India also faces the Section 232 duties of 25% on steel, aluminium and automobiles, which will be doubled to 50% from Wednesday (June 4). We previously noted that the US is the largest market for Indian aluminium, with exports valued at $946 million in FY2024. These exports had exceeded $1 billion in the previous two financial years, and were up from just $350 million in 2016-17 when Trump first became President. Similarly, the US was also the largest market for Indian iron and steel articles, with Indian exports valued at $2.8 billion in FY2024.
Lutnick also said that India may benefit from being one of the first countries to seek a trade deal with the US. “Earlier countries get a better deal, that’s the way it is”, he said. “So those who come in July 4th to July 9th, there’s just going to be a pile.” The 90-day tariff pause expires in July, and India is pushing to effect the trade deal before the end date.
While India has attempted to appease the US, slashing duties on American imports like bourbon whiskey and Harley-Davidson motorcycles, it has also expressed its discontent with Trump’s assertion that he helped broker a ceasefire between India and Pakistan last month.
India-EU trade deal halfway done: FT report
The Financial Times on Tuesday (June 3) reported that India and the European Union have achieved consensus on about eight out of roughly 20 topics to be covered by a prospective trade deal. This follows Indian commerce minister Piyush Goyal’s meeting with EU trade commissioner Maroš Šefčovič in Paris on Monday.
Both India and the EU are looking to finalise the trade deal this year, building on a commitment by Prime Minister Narendra Modi and European Commission President Ursula von der Leyen in February this year.
The topics reportedly include subjects like rules of origin and intellectual property rights, but will not address “sensitive” farming products such as dairy, FT reported.
The announcement is significant, with both India and the EU seeking relief from Trump’s tariffs.
According to the European Commission, the EU is India’s second-largest trading partner, accounting for goods trade worth €120 billion (about $137 billion) in 2024, or 11.5% of India’s total trade. India, on the other hand, is the EU’s 9th largest trading partner, accounting for 2.4% of the EU’s total trade in goods in 2024.
The goods trade between the EU and India has increased by 90% over the past decade, with the main Indian exports being machinery and appliances, transport equipment, and chemicals.
The trade in services between the two in 2023 was €59.7 billion (about $68 billion), with the EU accruing a deficit of €7.9 billion ($9 billion).
While India has attempted to appease the US, it has also expressed its discontent with Trump’s assertion that he helped broker a ceasefire between India and Pakistan last month. (NYT File Photo) 
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