Trump's Tariffs May Add USD 2,400 to U.S. Household Bills, Says SBI Report

A new report by the State Bank of India (SBI) says that recent US tariffs could raise the cost of living for American families. The report explains that because of higher inflation caused by these tariffs, household expenses in the US may increase by around $2,400 in the short term.

However, the impact will not be the same for all families. People with lower incomes could see losses of about $1,300, which means they will feel the pinch much more than richer families. On the other hand, wealthier households could lose up to $5,000, though the effect on their overall finances would be smaller.

SBI’s report noted, “US tariffs are projected to cost the average US household about USD 2,400 in the short term.”

US Economy Faces Bigger Trouble Than India

According to the report, this trade dispute will likely hurt the US economy more than India’s. This is because the US is currently dealing with a weaker dollar, rising inflation, and increasing prices in many sectors.

As the economy slows and inflation goes up, the US is expected to suffer more under the current trade pressure. The report warns that prices may rise further, especially in areas like electronics, vehicles, and household goods, which rely heavily on imports.

The report also mentioned that inflation in the US is already rising, and the effect of tariffs could push it above the Federal Reserve’s 2% target until 2026. As a result, everyday expenses for Americans will likely continue to go up for the next few years.

GDP Growth at Risk in the US

SBI stated that the rising costs due to tariffs could lower consumer spending, putting pressure on the US economy. The report estimates that the US GDP might shrink by 40 to 50 basis points because of higher production costs and reduced consumer demand.

While India may also feel the impact of US trade policy, the effect is expected to be less damaging. Though the US is India’s largest export destination and makes up around 20% of India’s exports for FY25, India has spread its exports across many countries.

The top 10 export destinations, including the US, account for about 53% of India’s total exports. This variety in trade relationships may help India handle the situation better than the US. The SBI report says that both countries may face economic trouble from tariffs, but the US is likely to experience stronger inflation and slower growth than India in the coming years.