India to gain in an uncertain world of tariffs, says SBI report

SBI report predicts India to benefit from US tariff action, focusing on potential gains and future trade agreements.

As tariff action by U.S. President Donald Trump looms large, the State Bank of India (SBI) in a special report said that India however would stand to gain in an increasingly uncertain world of tariffs.

“Trends indicate that the jump in the U.S. economy post-COVID may have been an outlier as a result of policy extravaganza. Long trends indicate a possible downturn in U.S. economy GDP growth along with a slowdown in U.S. exports and consumption,” SBI said in the report.

“The overall value add is showing a declining trend with shrinking Total Factor Productivity (TFP) growth. High U.S. wages could hold back new investment. Net savings to GDP is also at the lowest level since 2011, the second lowest since 1951,” it said.

“The U.S. debt to GDP ratio shows a secular rising trend… ironically… the U.S. currency showing strength show cyclical trends with falling peaks,” it further said. 

”If the structural adjustment gains traction, then only the U.S. potential GDP trend can see an upward shift. The crowding in of the private sector that follows along with technical progress can add to growth prospects. However, this adjustment will have short-term costs and has lots of ifs and buts,” SBI report.

According to SBI report, the reciprocal tariff may not impact India much.

The decline in exports from India to the U.S. could be in the range of 3-3.5% post reciprocal tariffs, if any, it said.