The Aryavarth Express
New Delhi: As 2025 draws to a close, it is set to be remembered as a “tariff-ied” year for the global economy, while 2026 is expected to mark a crucial phase of transition, according to a report by HSBC Asset Management.
The report said 2025 witnessed a decisive global shift toward higher tariffs, leading to disruptions in supply chains as countries adapted to a trade environment increasingly shaped by geopolitical tensions. It added that 2026 may be the first full year in which economies begin adjusting to a tariff-heavy global system, with the average effective global tariff rate currently estimated at 14 per cent.
HSBC noted that global growth and world trade are likely to undergo structural changes in this new environment. The impact of elevated tariffs is expected to become more visible in 2026, influencing investment flows, economic growth, inflation, interest rates, and currency movements.
The report also highlighted that the rise in bilateral trade agreements and varying trade relationships with the United States are set to further complicate the global trade landscape.
On the domestic front, the report observed that the second half of 2025 turned more challenging for India following a negative tariff-related shock. While initially seen as a short-term disruption, the prolonged impact began to weigh on key macroeconomic indicators over the year.
These pressures were reflected in the weakening of the Indian rupee, strains on trade and balance-of-payments metrics, and added complexities in the Reserve Bank of India’s liquidity management. The report pointed out that from July 1, the rupee depreciated by about 4.2 per cent, making it one of the weakest-performing emerging-market currencies during the period.
Despite external headwinds, HSBC said India’s domestic macroeconomic fundamentals remain robust, indicating what it described as a potential “golden period” for the economy.
However, the report cautioned that market focus remains firmly on external developments, particularly uncertainty around the timing and outcome of a favourable trade agreement with the United States. As a result, global factors are expected to play a decisive role in shaping India’s economic outlook as the world moves into 2026.
