Trump's 25% tariff on Indian exports threatens key sectors like pharmaceuticals, gems, textiles, and electronics. India-US trade, reaching $129.2 billion in 2024, faces disruption.
US President Donald Trump's recent move to impose a sweeping 25% tariff on Indian exports starting August 1 has sent shockwaves through India's trade corridors. The decision is poised to rattle multiple sectors—particularly pharmaceuticals, electronics, gems and jewellery and textiles potentially disrupting supply chains and shaving off margins at a time when global demand is already under strain.
In a post on Truth Social, Trump accused India of having "the most strenuous and obnoxious non-monetary Trade Barriers of any Country," and called its tariffs "among the highest in the world." He warned of further penalties due to India's continued energy trade with Russia, despite Western pressure.
The announcement comes as a significant blow to India, which had hoped for favorable treatment after Prime Minister Narendra Modi's visit to the White House earlier this year. In contrast, tariffs on exports from regional peers like Vietnam, Indonesia, and Japan have been capped at 20%, 19%, and 15% respectively.
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According to internal estimates, about 10% of India's total exports could be impacted between July and September if the tariffs are fully enforced. With India-US bilateral trade reaching $129.2 billion in 2024, the ripple effects could be sizable.
While exact sector-specific duties are yet to be announced, here’s a breakdown of the industries that could bear the brunt:
Pharmaceuticals
India is the world’s largest supplier of generic drugs to the US, exporting nearly $8 billion worth annually. Companies like Sun Pharma, Dr. Reddy’s, and Cipla earn over a third of their revenue from the US. A tariff shock could upend this trade, despite Indian generics saving the US healthcare system over $220 billion in 2022 alone.
Gems and Jewellery
India’s Gem and Jewellery Export Promotion Council called the tariff “deeply concerning,” warning it could severely disrupt the sector that sends over $10 billion worth of exports to the US annually. A blanket 25% duty could inflate costs, delay shipments, and threaten jobs across the value chain—from artisans to exporters.
Textiles and Apparel
Indian exporters of garments, home textiles, and footwear—key suppliers to US giants like Walmart, Gap, and Costco—will lose their cost advantage over Vietnam and Bangladesh. The Confederation of Indian Textile Industry said the new tariffs will “seriously test the resolve and resilience” of Indian players, including major exporters like Vardhman Textiles and Welspun Living.
Oil Refiners
Refiners like Indian Oil Corp, BPCL, and Reliance Industries may suffer indirectly. India imports nearly 37% of its crude oil from Russia at discounted rates. But with Trump hinting at penalties over India’s Russian oil imports, refiners could be hit by rising input costs and eroding margins.
Electronics
India’s rapid rise as an electronics hub—especially for smartphone assembly—now faces a setback. Apple’s shift to manufacture iPhones in India to avoid China tariffs could be reversed. A 25% levy might force Apple to rethink its sourcing strategy, analysts warned.
