In a critical economic assessment released on August 1, 2025, SBI Research has warned that the United States could end up bearing the heavier cost of President Donald Trump’s newly imposed 25% tariff on Indian goods. The report deems the move a “bad business decision,” asserting that the economic implications will ripple more through the U.S. economy than India's.
The U.S. administration, under Trump’s second term, announced sweeping tariffs on a range of Indian exports, effective August 7. While these were pitched as a strategy to punish India for its continued trade ties with Russia, the SBI Research report paints a very different picture—one where American consumers and economic indicators are likely to suffer more than those in India.
Short-Term Inflation Surge in the U.S.
According to the report, U.S. consumer prices are set to jump sharply due to the tariffs. In the short term, inflation is expected to rise by approximately 2.4%. While the inflationary pressure may cool down over time, it is still forecasted to settle at a sustained increase of 1.2%. This inflationary trend is directly tied to the higher import costs that American businesses will face, which will likely be passed on to consumers.
Higher Cost of Living for American Households
The burden of these tariffs will not fall evenly across the American population. The SBI report estimates that the average U.S. household will see an increase of around USD 2,400 in annual expenses. For low-income households, the additional cost is projected at approximately USD 1,300. In contrast, high-income families could see an added burden of up to USD 5,000 annually. Although wealthier households may be better positioned to absorb the cost, the broader consumer economy will still feel the strain.
GDP Growth Could Lose Momentum
The SBI study also anticipates a direct hit to U.S. economic growth. With rising prices weakening demand, and a stronger dollar being challenged by trade tensions and market instability, U.S. GDP could decline by an estimated 40 to 50 basis points. This would be a notable setback for the American economy, especially at a time when global economic conditions remain fragile.
Conclusion
While the tariffs were introduced as a punitive measure aimed at India, SBI Research's findings suggest they may boomerang on the United States itself. From increased inflation and household costs to downward pressure on GDP, the report casts doubt on the effectiveness and long-term wisdom of Trump’s latest trade move. With both geopolitical and economic consequences at stake, it remains to be seen how this tariff battle will evolve—and who will ultimately bear the heaviest burden.
Disclaimer:
This article is for informational purposes only and is based on publicly available research reports, including the SBI Research report dated August 1, 2025. It does not constitute financial, investment, or political advice. Readers are encouraged to consult qualified professionals before making any decisions based on the content of this blog. The author and publisher disclaim any liability for losses or damages arising from the use of this information.
