2025 was a tough year for all countries which were harangued by the imposition of high tariffs by the USA. India had a tougher time, given that there was an additional 25% tariff levied for importing Russian oil. 2026 has started off on a pleasant note, with India inking a pact with the EU in January and agreeing to certain terms when it comes to dealing with the USA in February.

The result is that the tariff now on India stands at 18%. This is definitely good news for exporters, who were at a disadvantage when it came to exporting to the USA, which is the largest market for India.

US tariff shift and economic impact

The winner in what could be called theatre of the absurd was the US. From an average tariff of 3% or so, which was imposed on imports, the US will get a minimum of 10% now, which goes up depending on the country involved. Therefore, in terms of tax collections, there should logically be a big push. This is what the president did talk of when he spoke of making sure that Americans don’t pay for other countries’ upliftment.

Two fears which were touted last year on account of higher tariffs were inflation and recession. Neither of them has been observed in the US, and it looks like the rules of economics have been rewritten.

Logically, higher tariffs should mean that prices of goods should go up in the US. Similarly, higher inflation should militate against growth. But both have held well, leading the Fed to lower interest rates. Growth, too, seems to be........

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