US Tariff on India: Impact, Affected Products, Rates & India’s Response

The US tariff on India was increased to 50% on August 27, 2025, under former President Donald Trump’s directive, impacting over half of India’s exports to the US. These additional India tariffs on US-bound goods target sectors like textiles, gems, jewellery, and leather, raising concerns about economic and diplomatic repercussions.

Key Highlights:

• Affected Sectors: Textiles, gems, jewelry, leather, marine, chemicals; 55% of USD 87B exports at risk.
• Exempted Sectors: Pharma, semiconductors, energy, critical minerals exempt, preserving supply chain roles.
• Economic Impact: Tariffs may cut GDP by 0.3-0.5%, USD 4-5B export drop, rupee risks.
• India’s Response: India condemns tariffs, seeks diplomacy, diversification, MSME support, no retaliation.

What are the US Tariffs on India?

The India tariffs on US exports refer to the 50% duties imposed by the US government on a wide range of Indian goods in 2025. Announced on August 6, 2025, and enforced from August 27, 2025, these tariffs were justified under Section 232 (National Security) and Section 301 (Unfair Trade Practices) of US trade laws.

They follow India’s continued Russian oil imports and expanding role within BRICS, making this both an economic and geopolitical move.

Trump’s Additional Tariffs on Indian Imports

• The US President Donald Trump announced the additional tariffs will be implemented on Indian goods from 27th August 2025, on 6 August 2025 which are getting imported in US. 
• This follows an earlier 25% duty implemented on August 1, 2025, targeting India’s continued purchase of Russian oil amid geopolitical friction over the Russia-Ukraine war. 
• The tariffs were the highest the US charged on any of its other trading partner. This high tariffs has caused a lot of worry in India because it puts their USD 87 billion worth of exports to the US at risk and is making the relationship between the two countries tense.

Overview of US-India Trade Relations

The United States and India maintain a strong and expanding trade partnership, with commerce between the two nations reaching record levels in recent years. Below are the key details of their trade relationship as of 2024–25:

• Bilateral goods trade between the two countries stood at around USD 129.2 billion in 2024.
• The US recorded a trade deficit of approximately USD 45.7 billion with India.
• India’s major exports to the US include pharmaceuticals, precious stones and jewellery, electrical machinery, and mechanical appliances.
• The US remains India’s largest goods trading partner, accounting for nearly 11% of India’s total trade.
• Both nations continue trade talks to reduce tariffs and enhance market access for key products such as spirits, motorcycles, and industrial machinery.

US Tariff Implementation Dates on Indian Goods (2025)

The 50% Tariff Structure on Indian Goods

The US tariff on India now totals 50% on most Indian exports, combining a 10% baseline duty, a 25% reciprocal tariff (announced on April 2, 2025), and an additional 25% tariff effective August 27, 2025. Unlike China (30%) or Vietnam and the Philippines (20%), India and Brazil face the highest tariff rate among major US trade partners.

Exempted Sectors

Certain high-priority sectors remain exempt to safeguard US supply chains, including:

• Pharmaceuticals
• Semiconductors
• Energy resources (crude oil, natural gas)
• Critical minerals

This exemption protects India’s strategic exports, especially its generic drug industry, which supplies nearly 50% of the US pharmaceutical market.

Sectors Most Affected

The following industries face the greatest exposure under the new 50% tariff regime:

• Textiles and apparel
• Gems and jewellery
• Leather and footwear
• Marine products
• Chemicals
• Automobile components

Collectively, these sectors make up over 55% of India’s exports to the US, placing them at high risk from the tariff hike.

List of Indian Products Impacted by US Tariff Rates 

Economic Impact of Tariffs on India

The tariffs threaten India’s USD 434 billion export engine, with USD 87 billion directed to the US, equivalent to 2.5% of India’s GDP. 

• Industry estimates suggest a USD 4–5 billion drop in engineering exports alone. 
• Overall GDP growth could decline by 0.2–0.5%, with forecasts revised from 6.5% to as low as 6%. 
• The sectors like Small and medium enterprises (MSMEs), which dominate textiles and leather, face reduced competitiveness against rivals in Vietnam and Bangladesh, where tariffs are lower. 
• The Indian rupee has weakened in offshore markets, raising concerns about imported inflation and increased borrowing costs for foreign debt-laden companies.

Stock Market Reaction to Tariff Announcement

As of October 2025, the Indian stock market continues to experience volatility following the US tariff on India. The tariff shock has triggered a broad market correction, especially in export-linked sectors, while defensives like pharmaceuticals and IT remain resilient.

Sector Performance Highlights

• Textiles, Leather, and Gems & Jewellery: These sectors are the worst hit, with several exporters reporting up to 50% decline in turnover. Many are redirecting shipments to European and Gulf markets or offering deep discounts to retain US buyers.
• Automobiles & Auto Components: Margins are under pressure due to weaker overseas demand and higher input costs.
• Pharmaceuticals: The Nifty Pharma Index has gained over 3% since August, supported by tariff exemptions and stronger export orders to the US.
• IT Services and FMCG: Relatively insulated from trade exposure, these sectors continue to attract domestic and institutional investors.

Market Indicators

• The Sensex and Nifty have corrected around 2.8% month-on-month, mainly due to FII outflows and rupee weakness.
• The Indian Rupee is trading near a record low of Rs. 88.78 per USD, as investors price in trade and inflation risks.
• Despite external headwinds, India’s IPO market remains robust, with USD 5 billion+ in new listings during October 2025. This signals investor confidence in domestic demand-driven growth.
• While export-heavy sectors remain under pressure, stability is expected in Q4 2025 as trade talks progress and domestic consumption cushions external shocks.

India’s Strategic Response to the US Tariff

In response, India has not announced any retaliatory tariffs on US goods yet but has reserved the right to act through WTO mechanisms. While India tariffs on US products remain unchanged as of October 2025, the government is assessing reciprocal options if trade talks fail.

• Diplomatic Engagement: Government remains committed to a fair bilateral trade agreement, with a fall 2025 deadline for negotiations.
• Sectoral Support: Commerce Minister Piyush Goyal has ruled out direct subsidies but proposed measures like interest subsidies, loan guarantees, and reduced certification fees for MSMEs.
• Market Diversification: Industry leaders like Anand Mahindra advocate exploring new markets to reduce US dependence.
• Domestic Resilience: PM Narendra Modi has promoted local products to cushion global demand shocks.

Potential sectors for reciprocal tariffs (under review):

• Agriculture (soybeans, almonds, apples)
• Automobiles and motorcycle imports
• Spirits (bourbon whiskey)
• Medical equipment

India’s strategy aims to avoid an immediate escalation while safeguarding domestic industries and preserving diplomatic flexibility.

US Pressure on India Amid Geopolitical Tensions

As of October 2025, the US tariff on India remains in place at 50% on most Indian goods, with no rollback yet despite ongoing diplomatic talks. The issue has shifted from pure trade friction to strategic politics, linked to India’s continued Russian oil imports, BRICS cooperation, and non-alignment in global conflicts.

Final Word

As of October 2025, the US tariff on India remains at 50%, impacting major exports like textiles, gems, and auto parts. While India tariffs on US goods are unchanged, New Delhi focuses on diplomacy, WTO consultations, and export diversification. A possible tariff review is expected after the 2026 US elections, depending on trade negotiations.

Also Read: Reciprocal Tariffs 2025: Impact on India’s US Export Trade