US Tariff Impact To Ease Within Two Quarters: CEA Nageswaran

New Delhi, Aug 14 (KNN) Chief Economic Advisor (CEA) Anantha Nageswaran has downplayed the long-term impact of the 50 percent additional US tariffs on India, saying the current disruption could ease within one to two quarters. 

Speaking at the Emkay Confluence 2025 on Wednesday, he acknowledged the possibility of short-term effects but stressed that, from a long-term perspective, the impact will not be that significant, according to FE.

The escalation follows US President Donald Trump’s executive order last week imposing an extra 25 percent tariff on India over its purchases of Russian oil, on top of an existing 25 percent levy announced earlier this month. 

The first tranche took effect on August 7, while the oil-linked tariff is scheduled for August 27.

Trade negotiations between India and the US remain ongoing, with a sixth round of talks expected when an American delegation visits New Delhi on August 25. 

The outcome could also be influenced by a planned meeting between Trump and Russian President Vladimir Putin in Alaska on August 15, aimed at discussing a possible resolution to the war in Ukraine.

Nageswaran said the government is engaging with exporters impacted by the US measures and will announce a policy response in due course. 

Despite the tariff shock, he noted that economic momentum remains intact, supported by multiple indicators pointing to continued growth.

Touching on structural priorities, Nageswaran highlighted the need for careful and timely deployment of artificial intelligence, as well as the urgency of closing the gap with the US and China in areas such as semiconductors, security capabilities, and technological infrastructure. 

He cautioned that trade tensions should not overshadow critical challenges like energy transition, energy security, and fostering public–private collaboration.

According to the finance ministry’s latest monthly report, strong domestic demand and resilient services activity helped sustain growth in the first quarter of FY26. 

However, sluggish credit growth, weak private investment, and continued uncertainty over US tariffs could limit acceleration in the months ahead. 

(KNN Bureau)