US tariffs worth $10 billion won’t shake up India’s $4 trillion economy, says Mark Matthews

Any potential reciprocal tariff is unlikely to have a significant impact on India’s $4 trillion economy, which is expect to see a steady recovery this year, and remains a standout investment destination, said Mark Matthews of Julius Baer, adding that the uncertainty around Trump’s April 2 pronouncement could remain a key overhang.

In an interview with Moneycontrol, Mark Matthews of Julius Baer has said that the estimated effect of these tariffs may amount to around $10 billion, which is insignificant in the context of India’s $4 trillion economy. He acknowledged that the headlines may seem alarming, but the actual economic consequences for India would be largely immaterial.

There has been conflicting commentary from the White House on tariffs, with recent reports suggesting a more targeted and less drastic approach. However, uncertainty remains, and from an India standpoint, policymakers, corporates and investors alike are all waiting for a clearer picture on the extent of trade restrictions expected from US President Trump on April 2.

Even though there is a US delegation in India to discuss bilateral trade arrangements, Trump hasn’t made it easier, having referred to the country as the ‘tariff king’ time and again.

Meanwhile, the Indian stock market is in the middle of a swift recovery after months of correction, with foreign investors also showing signs of a comeback after an extended selling spree that lead to outflows worth $3 trillion since September 2024.

Mark Matthews said he remains confident and expects India to become the third largest economy soon, and attributes last year’s downturn to RBI’s hawkish stance, which restricted lending, and government’s reduced spending due to ongoing assembly elections. With these headwinds taken out, Matthews believes no other major economy matches India’s projected 6% growth over the next few years. A key indicator of India’s resilience, he added, are the GST receipts, which have shown no signs of slowing down.

While the Chinese equity market has rebounded sharply from September 2024 lows on hopes of an economic recovery, many economists remain skeptical of Beijing’s 5% GDP growth claim. Mark Matthews said that while some other nations may share India’s growth trajectory, they are often smaller, less liquid, and more volatile. This, he argues, reinforces India’s position as a standout investment destination.

Matthews anticipates a sideways movement in the dollar amid declining investment flow into the US and concerns over greenback being overvalued, which he said bodes well for emerging markets like India.

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