Trump tariffs pose low risk of job losses, but…, Chief Economic Adviser cautions

V Anantha Nageswaran, the Chief Economic Advisor to the Prime Minister, said the impact of US tariffs would have offsetting effects, with job losses largely confined to export-oriented units that are heavily dependent on the American market.

Earlier this month, US President Donald Trump announced 25 per cent base tariffs on India and an additional 25 per cent for buying Russian oil, saying it indirectly funded the Ukraine war. The US also wanred that if India did not stop buying Russian crude, secondary tariffs may be well on their way too.

Speaking to news agency ANI, Nageswaran pointed out that stronger domestic demand, supported by a good monsoon and rising rural consumption, could help compensate for the impact. Therefore, he added, any job losses that do occur are unlikely to be significant.

The top economist also noted that some of these firms could explore alternative markets, while others might take a medium-to long-term view, choosing to retain workers if the tariff-related uncertainties proved temporary.

On Friday, he also said that high tariffs are expected to be "short-lived" as both countries are in talks for the removal of the 25 per cent penal tariff and a subsequent bilateral trade deal.

Commenting on India's 7.8 per cent GDP growth rate in Q1 2026, Nageswaran said that India’s strong GDP performance was driven by robust growth in manufacturing and services, along with government consumption, which had been negative in the first quarter of the previous year but benefited this time from a favourable base effect and added that a lower GDP deflator, reflecting easing inflation, also supported the figures.

"Despite the reciprocal tariffs and penal tariffs (imposed by the US), and after seeing the resilience of Q1 growth, we are retaining the growth rate projections for the current fiscal at 6.3-6.8 per cent," Nageswaran told reporters in Delhi.

He also cautioned that the upcoming quarters could see some impact, particularly on the external sector, due to tariffs affecting export growth, which might spill over into domestic production and capital formation.

However, he emphasised that any slowdown in the second or possibly third quarter would likely be contained, temporary, and transitory, as tariff-related uncertainties were not expected to persist for long.

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