• Source:JND
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Impact of Trump tariff on Americans: US President Donald Trump on Wednesday announced the imposition of a 25 per cent tariff on all goods coming from India starting August 1, plus an unspecified penalty for buying Russian crude oil and military equipment. Although the tariffs were imposed on Indian goods, the new tariffs imposed by the United States are expected to significantly impact American households, with average bills likely to rise by around USD 2,400 (Rs 2,10,072.60) in the short term due to inflation driven by these tariffs, according to a research report by the State Bank of India (SBI).

The report, however, says that the burden of these increased household expenses will not be evenly distributed. Low-income households in the US may see losses of around USD 1,300, which is nearly three times the relative burden compared to wealthier families.

High-income houseould to face more burnt

On the other hand, high-income households could face losses of up to USD 5,000, though the overall impact on their financial stability would be less severe. It stated, "US tariffs are projected to cost the average US household about USD 2,400 in the short term".

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The report also pointed out that the renewed trade conflict is likely to hurt the US economy more than India's. This is because the US currently faces a weaker dollar, higher inflation, and the potential for greater price pressures due to the tariffs. The American economy, with a lower GDP growth outlook and increasing inflation, is projected to suffer more from the current trade conditions.

Bad impact of Trump's tariff on US economoy

Tariffs are expected to lead to a rise in prices, especially in sectors that rely heavily on imports, such as electronics, automobiles, and consumer durables. The report mentioned that inflation in the US is already showing signs of picking up, and the pass-through effects of these tariffs are expected to keep inflation above the US Federal Reserve's 2 per cent target through 2026.

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According to the report, these tariff-related pressures will not only increase household expenses but may also weigh on the broader US economy. The US GDP is expected to take a hit of around 40 to 50 basis points due to higher input costs and weaker consumer demand stemming from inflation.

Impact on India will be less: Report

Meanwhile, the economic impact on India is expected to be relatively less severe. Although the US is India's largest export destination, accounting for about 20 per cent of exports in FY25, India has diversified its trade portfolio. The top 10 countries, including the US, account for around 53 per cent of India's total exports. This diversified base is expected to act as a cushion, limiting the negative impact on India's overall export performance.

The SBI report suggested that while both economies will face challenges, the inflationary and growth impact will likely be more intense for the United States than for India.cBesides households, the tariff hike will result in increased costs for essential drugs in the US, ultimately harming consumers and healthcare systems in the country in the long term.

(With inputs from agencies)