(23 Apr 2025, 11:35)

Economic Buzz: Trade policy uncertainty emerging as the key driver of near-term outlook says RBI

Reserve Bank of India noted in a latest monthly update that the global economic landscape is rapidly evolving, with trade policy uncertainty emerging as the key driver of the near-term outlook. On April 2, 2025, the US announced a 10 per cent base tariff and reciprocal levies on approximately 60 countries, taking average US tariffs to their highest levels in over a century. A 90 day pause on implementation of tariffs was announced on April 9 for those countries which did not resort to retaliatory actions. These developments have stoked fears of a global trade war, and countries are still working out their appropriate response in this uncertain environment. The baseline assessment is that global growth is likely to weaken while potential pass-through of tariffs to consumer prices could keep inflation elevated. It is estimated that a trade war triggered by the increase in import tariffs is likely to weaken global output by 0.5%.

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Economic Buzz: Trade policy uncertainty emerging as the key driver of near-term outlook says RBI