Tariff tracker: Vance in India, nosediving dollar, a cautious IMF

Deals and warnings

The bilateral trade deal with the US is crucial for India.

The US is India’s largest trading partner, with total goods trade between the two countries estimated at $129.2 billion in 2024. The US imported goods worth $87.4 billion in 2024 from India, up 4.5 per cent ($3.7 billion) from 2023.

If, after the 90-day pause, Trump were to restore the 26% tariff, Indian imported goods will become more expensive in the US, potentially leading to customers looking elsewhere. That could significantly harm Indian businesses and jobs. For example, Andhra Pradesh Chief Minister N Chandrababu Naidu, an NDA ally, had earlier this month written to the Centre to get shrimps exempt from the US tariffs — his state is a big exporter of shrimps and other marine products.

To escape the tariff damage, countries, just like India, have been holding talks with the US for one-on-one trade deals. China, the biggest Trump target, is understandably unhappy about this.

Beijing will firmly oppose any party striking a deal with the US at China’s expense, its Commerce Ministry said recently, as reported by Reuters. Beijing “will take countermeasures in a resolute and reciprocal manner” if any country sought such deals, a ministry spokesperson said. Reports have long made the rounds that Trump has been demanding limited trade with China in return for tariff relief to countries. Smaller economies are likely to get caught in the crossfire, as China is the chief supplier of a variety of cheap goods to much of South Asia and beyond.

Events to watch out for

Multiple indicators of global economic health are likely to come out this week.

In the US, financial results of several companies, including giants like Google parent Alphabet and Elon Musk’s Tesla, will come. On April 23, the US Federal Reserve will release its ‘Beige Book’, a report it puts out eight times a year, and which “gathers anecdotal information on current economic conditions” through reports from “bank and branch directors and interviews with key business contacts, economists, market experts, and other sources.”

Purchasing Manager Indexes, which basically provide a snapshot of economic health through monthly surveys of private sector companies, are also coming out in the US, Europe, and Japan.

Then is the International Monetary Fund’s (IMF) Spring Meeting of finance ministers, central bankers, and private sector honchos, beginning today and going on till April 26. The IMF will release its World Economic Outlook after this.

Kristalina Georgieva, IMF Managing Director, last week gave some indication of what the report would contain: “…our new growth projections will include notable markdowns, but not recession. We will also see markups to the inflation forecasts for some countries. We will caution that protracted high uncertainty raises the risk of financial market stress,” she said.

Georgieva, in a curtain-raiser speech for the Spring Meeting, also outlined potential impacts of the tariff tensions: “First, uncertainty is costly. The complexity of modern supply chains means imported inputs feed into a broad range of domestic products. The cost of one item can be affected by tariffs in dozens of countries.”

She added that rising trade barriers hit growth upfront, while “protectionism erodes productivity over the long run, especially in smaller economies.”

In brief, this means that if you make imports more expensive, consumption will fall for some time and the economy will slow down. Manufacturers may set up factories in your country — Trump’s stated aim —but this process takes time. When it does happen, it is not a silver bullet — shielding your makers from foreign competition can mean your consumers have less choice and pay more for products that may not be the best.