-1753886043247.webp)
- By Shivangi Sharma
- Wed, 30 Jul 2025 08:15 PM (IST)
- Source:JND
In a move that could significantly impact India’s export-driven sectors, US President Donald Trump has imposed a 25 per cent tariff on Indian imports, citing trade imbalance, high Indian tariffs, and India’s continued energy and defence ties with Russia. In a strongly worded statement, Trump said, “India will therefore be paying a tariff of 25 per cent, plus a penalty... starting on August first,” blaming India’s military deals and energy purchases from Russia during the Ukraine war.
The decision comes amid ongoing trade negotiations between the two countries. New Delhi confirmed that five rounds of talks have already taken place, with a sixth planned for mid-August. Progress has stalled due to differences over market access, particularly India’s refusal to open its agriculture, dairy, and automobile sectors to US competition.
Blow To Indian Exports
India’s bilateral trade with the US touched approximately USD 130 billion in 2024, with a USD 45–46 billion surplus in India’s favour. That surplus is largely powered by exports of pharmaceuticals, auto components, gemstones, and electrical equipment. The new tariffs are expected to hit these sectors hard, eroding India’s price advantage in the US market.
The affected industries include automobiles, auto parts, smartphones, marine products, gems and jewellery, electronics, steel, aluminium, and food exports. High-profile exporters like Tata Motors, Bharat Forge, and Apple’s Indian manufacturing partners could see declines in demand, leading to possible layoffs or cost reductions. The jewellery industry, which ships more than USD 9 billion worth of goods annually to the US, is also under serious threat.
Some strategic sectors like pharmaceuticals, semiconductors, and critical minerals have been temporarily spared, but Trump has hinted that drugs could also be targeted in future tariff rounds.
GDP And Currency Impact
Economists predict that these tariffs could shave off 0.2 per cent to 0.5 per cent from India’s GDP if they remain in effect through FY26. Export-focused MSMEs and industrial hubs in Maharashtra, Gujarat, and Tamil Nadu are particularly vulnerable. The Indian rupee has already fallen to a four-month low, reflecting investor concern over reduced dollar inflows and deteriorating trade relations.
Despite this, analysts note that India’s new tariff rate remains more favourable than the US duties on China (34 per cent) and Vietnam (46 per cent). This gives Indian exporters some breathing room, especially in segments like chemicals, garments, and processed foods, where US importers are looking to diversify supply chains away from China.
Trade Talks At Crossroads
The core issue remains a lack of reciprocity in trade policies. Washington is demanding greater access to India’s high-tariff sectors like agriculture and digital services, while raising tariffs on Indian steel and auto exports. But India has held its ground, unwilling to accept genetically modified crops or risk disruption to its rural economy, which supports over 700 million people.