CHENNAI: Tamil Nadu is bracing itself for potential economic headwinds from the new 26% tariff imposed by the United States, even as it posted a 9.69% growth rate for 2024-25 – the fastest in India and the highest the southern manufacturing hub has recorded in a decade.
Industries Minister T R B Rajaa said the state government has convened high-level meetings to assess the broader economic implications of the US move. Although the new tariffs do not explicitly target services or India’s vast IT industry, Rajaa warned that indirect consequences—particularly for export-linked manufacturing —could be significant.
“Our competition is with countries, not other Indian states,” Rajaa said, reiterating TN’s ambition to be seen not as a regional player, but a globally-competitive economic force.
He attributed the state’s strong growth performance to active monitoring of international trade dynamics and nimble policy interventions to support sunrise sectors. TN, known for its automotive, electronics, and textiles industries, has grown increasingly export-oriented in recent years – a factor that makes it more vulnerable to trade shocks.
Rajaa noted that policymakers worldwide are still grappling with the long-term macroeconomic impact of protectionist measures.
“There is insufficient understanding internationally about how tariffs ripple through economies,” he said.
The state government has launched a sector-wise impact analysis to evaluate the effect of the new US tariffs and identify areas where course correction or pre-emptive action may be required. Official sources, speaking on condition of anonymity, told TNIE that the short-term impact of the tariffs on TN is likely to be limited.
“In fact, over the long term, this may even play to our advantage, as key competitors in electronics and textiles are also affected by the higher US tariffs,” sources said.