25% Tariff Will Hurt US More Than India, Says SBI Report

The ongoing India-US trade standoff continues to grab headlines, especially as the 25% tariff by the US is set to take effect from August 7. In a strong statement, SBI Research has said the tariff move by former US President Donald Trump is a “bad business decision” that could hurt the US more than India.

In a detailed 25-page report, SBI Research argues that while India may feel the pressure, it will not be badly shaken. The global supply chain will adjust over time, and Indian businesses must use this as a chance to boost the ‘Made in India’ brand. The report claims the US economy, with a weaker dollar, higher inflation, and slower GDP, will face more damage from the tariff shock than India.

SBI believes the trade talks have hit a wall, not due to economics, but political reasons. “Trade talks are an incorrect lever in the current regime’s logic,” the report states. It suggests that India’s growing strength—economic, military, and global branding—may be making the US uneasy.

The timing of this tariff decision also raises questions, as Trump’s approval rating stands at a low 37%. The report hints this may be a political move rather than an economic one.

Tariff Impact on the US: Rising Costs and Inflation
SBI Research warns the new tariffs could backfire on the US, triggering higher inflation and pushing up consumer prices. The US imports goods worth over $3 trillion, and a 20% average tariff would hit nearly all of them. According to SBI, inflation in the US may rise by 2.4% in the short term and 1.2% in the long term.

Tariffs could reduce US GDP by 40–50 basis points. For US households, this means added expenses—low-income families may lose up to $1,300, and high-income ones nearly $5,000 annually, due to increased costs on goods.

India’s Economy: Smaller Impact, Stronger Position
India is better placed, according to the report. Although the US is India’s largest export partner (20% in FY25, projected 22.4% in FY26), India has diversified trade routes. The top 10 countries make up only 53% of its exports.

The expected hit to India’s GDP is about 25–30 basis points, far lower than the US. Key sectors like pharma, smartphones, and diamonds may face a blow, but India could respond by lowering tariffs in select sectors like autos, capital goods, and textiles.

No Clear Winner, But the US Has More to Lose
In the end, SBI Research believes neither country gains from this trade fight, but the US could face greater economic pain—higher inflation, supply disruptions, and public backlash. The report calls for India to stay focused, reinforce its export strength, and turn the challenge into an opportunity.