‘A self-goal’: Raghuram Rajan slams Trump’s tariff move, says impact on India will be ‘smaller’

US President Donald Trump has announced additional ad-valorem duties ranging from 10% to 50% on imports from all trading partners.

Former Reserve Bank of India (RBI) Governor Raghuram Rajan on Thursday criticized the Trump administration’s imposition of reciprocal tariffs on about 60 countries, calling it a "self-goal" and predicting a limited impact on India.

US President Donald Trump has announced additional ad-valorem duties ranging from 10% to 50% on imports from all trading partners. The baseline duty of 10% will take effect from April 5, with the 27% duty following on April 9. Certain sectors, including pharmaceuticals, semiconductors, and energy products, are exempted.

"Let us recognise that in the short run, this will adversely affect the US economy first and foremost — it is a self-goal as footballers would say. Coming to the effects on other countries, the direct effect of any tariff on India’s exports will be to raise prices for US consumers, reducing their demand, and hence Indian growth," Rajan said in an interview to PTI.

The eminent economist, currently a professor at the University of Chicago’s Booth School of Business, noted that since the US has imposed tariffs on multiple countries, the overall impact on India will be "smaller" than if the duties had targeted only Indian exports.

Rajan said Trump’s long-term intent is to boost US domestic production, but even if achievable, it would take considerable time to materialize. He also suggested that the new tariffs could have a disinflationary effect on India, as the country exports less and retains more goods for domestic consumption. Additionally, with the US market becoming more restrictive, other countries like China may redirect their exports to India.

When asked whether India could turn the situation into an opportunity, Rajan said, "We can certainly bring down the tariffs we have been raising — that would be beneficial to India regardless of whether it will help us negotiate down US tariffs."

He emphasized the need for India to navigate the increasingly protectionist global trade environment strategically. "For example, looking east toward ASEAN and Japan, looking southwest to Africa, and looking northwest to Europe all make sense," he told PTI.

Rajan also stressed the importance of fostering stronger trade relationships with neighboring countries, saying, "Working out a more equitable relationship with China should be a priority. Equally, let us build stronger bridges within SAARC, our neighbours. That means overcoming political differences. As the world breaks up into regional blocs, South Asia should not be the odd region out."