US tariff impact won’t last more than six months, says CEA Nageswaran

Chief Economic Adviser V Anantha Nageswaran on Wednesday said US tariffs-related challenges will dissipate in the next one or two quarters, and urged the private sector to do more as the country navigates through other longer-term challenges.

He attributed the growth slowdown in FY25, which saw a deceleration to 6.5 per cent from FY24’s 9.2 per cent, to tight credit conditions and liquidity issues. The right agriculture policies can add 25 per cent to real GDP growth, Nageswaran added.

On the US tariffs, the CEA said it was the second and third order impacts, which would flow once sectors such as gems and jewellery, shrimps and textiles have taken the first order brunt, that will be “more difficult” to tackle.

The government is aware of the situation and conversations with the impacted sectors have already begun, Nageswaran said, adding that one would hear from the policymakers in the coming days and weeks but people have to be patient.

With speculation on whether US officials will visit India for trade talks later this month as reported, Nageswaran said the upcoming meet in Alaska between US President Donald Trump and his Russian counterpart Vladmir Putin was likely to influence the outcome.

Declining to spell out any details on the trade negotiations between India and the US, the academic-turned-advisor said things were very fluid at the world stage right now with relations swinging from cooperation to stalemate, and spelled out his expectation of the impact of 50 per cent US tariff on Indian exports.

He said no one could guess the exact reasons why Trump chose to slap the high tariffs on India, wondering if it’s the fallout of Operation Sindoor or something even more strategic.

However, the CEA said the focus on tariff-related issues should not blind us to more “important challenges”, including the impact of artificial intelligence, reliance on one country for critical minerals, and their processing and strengthening of supply chains.