NEW DELHI: Ongoing uncertainty surrounding US trade policy—especially the recent tariff moves by the Trump administration—is expected to undermine business confidence and consumer sentiment across Asia, including India, and could significantly dampen regional growth, Moody’s Ratings said on Sunday.
While President Donald Trump has announced a three-month delay in implementing reciprocal tariffs on most countries, China remains the exception, with a steep 125 per cent tariff already imposed. An additional 10 per cent duty on exports to the US will also continue, maintaining pressure on global trade dynamics.
Nicky Dang, Senior Vice President at Moody’s Ratings, told PTI that “an escalation of US-Sino tensions and the spill-over effects from a slowdown in China pose significant downside risks to the region’s growth prospects.”
India may offer some resilience, but risks remain
Economies with large domestic markets, such as India, may benefit from companies looking to tap into local demand, but Moody’s believes any major shift in investment flows would take several years to materialise.
Moody’s Analytics, a separate Moody’s unit, recently cut India’s growth forecast for the 2025 calendar year to 6.1 per cent, down from 6.4 per cent projected in February, citing global headwinds and trade volatility.
Dang added that while the tariff pause may soften the immediate impact, the 10 per cent universal duty and widespread exposure to the US economy continue to pose threats to Asian markets.
“The uncertainty surrounding US trade policies will likely continue to undermine business confidence and consumer sentiment in the region, potentially lowering domestic demand and growth prospects,” she said.
“Furthermore, the additional tariffs on Chinese exports, which were not included in the pause, exert further pressure on China’s growth,” she told PTI.
De-globalisation and trade re-alignment accelerate
According to Dang, the tariff moratorium does not reverse the broader trend of de-globalisation, but rather increases trade policy unpredictability, especially as the US continues to push for reshoring of manufacturing supply chains.
She noted that recent developments reflect a structural shift in the global trading system, which had previously relied on trust and rule-based frameworks.
India-US trade talks
Trade experts in India believe that the 90-day pause in tariffs provides a critical window to advance negotiations on the proposed bilateral trade agreement (BTA) between India and the US.
Currently, bilateral trade between the two nations stands at around USD 191 billion, with a shared goal of raising it to USD 500 billion by 2030. Negotiators are aiming to conclude the first phase of the BTA by September–October this year.
“The 90-day moratorium provides some space for all governments to negotiate for more favourable terms… Higher overall tariffs still place some inflationary pressure on the US economy,” Dang said.
“In the meantime, policy uncertainties are likely to continue weakening business and consumer sentiment and reducing domestic demand, posing downside risks to growth,” she added.
