On April 2, US President Trump announced a reciprocal tariff plan, imposing a 10% baseline tariff on imports from all countries starting April 5, with higher tariffs on about 60 countries, effective April 9. India faces a 26% tariff—significantly higher than the existing tariff differential. While the U.S. is an important export market, exports to the U.S. account for only 2.1% of India’s GDP, limiting the overall economic impact. The total potential impact on India is estimated at 43 to 54 basis points of GDP, factoring in both direct effects and a possible global slowdown. Sectors such as electronics, textiles, and machinery are likely to be most affected, while pharmaceuticals and energy exports benefit from exemptions. India is currently negotiating a trade deal with the US, expected by Fall 2025, which could help reduce long-term effects. In the upcoming policy meeting, the RBI is expected to reduce the policy repo rate by 25 basis points to support economic growth, amid easing inflationary pressures.