US Tariffs Announced: India Hit with 26% Duty

Posted by Written by Archana Rao Reading Time: 10 minutes

The US has announced sweeping tariff hikes under Trump’s new trade policy, directly impacting India’s exports to its largest trading partner. With a baseline 10 percent tariff on all imports and significantly higher rates for countries with large trade surpluses, India now faces duties as high as 49 percent on certain products. Washington’s latest move could disrupt key Indian industries, including pharmaceuticals, gems and jewelry, textiles, and agriculture.

As the US tightens its trade policies, India must navigate the shifting landscape to protect its economic interests.


US rolls out new trade tariffs

US President Donald J. Trump has introduced a comprehensive plan for reciprocal tariffs, asserting that foreign countries have long exploited the United States through unfair trade practices. During his national address, Trump emphasized April 2, 2025, as “Liberation Day” for the US and revealed a detailed tariff structure targeting various countries.

US Tariff Rates Imposed by the Trump Administration on April 2, 2025

Country

Tariff %

Country

Tariff %

Australia

10%

Brazil

10%

Bangladesh

37%

Chile

10%

China

34%

Cambodia

49%

European Union

20%

Indonesia

32%

India

26%

Japan

24%

Malaysia

24%

Singapore

10%

South Korea

25%

South Africa

30%

Switzerland

31%

United Kingdom

10%

Vietnam

46%

Turkey

10%

Taiwan

32%

Thailand

36%

Source: Fact Sheet, White House

Trump has said that the tariff implementation will be done in two phases:

1. Baseline 10 percent tariff on all countries

  • Effective date: April 5, 2025, at 12:01 a.m. EDT
  • Details: A 10 percent tariff will be imposed on all imports from every country.

2. Higher tariffs on countries with the largest trade deficits

  • Effective date: April 9, 2025, at 12:01 a.m. EDT
  • Details: Countries with which the US has the largest trade deficits will face higher, individualized reciprocal tariffs. The exact rates will vary depending on the level of the deficit.

US Trade Deficit with Top 15 Trading Partners (Value in US$ Billion)

S. no

Country/region

Balance value in 2020

Balance value in 2021

Balance value in 2022

Balance value in 2023

Balance value in 2024

1

Canada

-21.9

-58.7

-93.3

-78.35

-73.66

2

Mexico

-117.2

-111.8

-134.8

-156.85

-175.94

3

China

-331.96

-388.6

-421.87

-300.23

-319.09

4

Netherlands

17.16

17.07

37.25

42.8

54.59

5

United Kingdom

7.2

3.93

11.89

8.6

10.67

6

Japan

-58.7

-64.54

-74.12

-75.4

-72.32

7

Germany

-59.92

-72.89

-77.5

-86.38

-87.93

8

Korea, Republic of

-27.39

-32.8

-49.4

-54.88

-69.91

9

Brazil

10.08

14.112

12.2

3.8

5.48

10

Singapore

-4.19

5.37

14.04

1.73

2.47

11

France

-15.59

-20.9

-12.16

-13.66

-16.76

12

Taipei, Chinese

-32.23

-43.8

-52.36

-50.14

-76.39

13

India

-26.49

-36.87

-43.65

-47.16

-49.48

14

Australia

8.7

13.6

13.58

17.29

17.5

15

Belgium

6.27

12.1

8.05

15.3

5.9

Source: ITC Trade Map

The White house has said that these tariffs will remain in place until Trump determines that the trade deficit and nonreciprocal trade practices have been resolved or mitigated.

The tariffs will be implemented under Trump’s authority through the US’s International Emergency Economic Powers Act of 1977 (IEEPA), which allows the President to take economic actions in response to a national emergency.

US trade policy shift and national trade estimate report 2025

A day prior to the official release of new tariff rates by Trump, the Office of the US Trade Representative (USTR) released its annual National Trade Estimate Report, highlighting India’s high tariff and non-tariff barriers on imports.

The report, released on March 31, 2025, stated that in 2023, India’s average Most Favored Nation (MFN) applied tariff rate was 17 percent, the highest among major economies. Some of the key tariff rates in India as of 2023 are list below:

  • Overall average tariff: 17 percent
  • Non-agricultural goods: 13.5 percent
  • Agricultural goods: 39 percent

The report also highlighted high tariffs imposed by India on specific goods such as vegetable oils, apples, corn, motorcycles, automobiles, flowers, coffee, raisins, walnuts, alcoholic beverages, etc.

MFN Tariff Applied by India on Imports from the US as of 2022

Commodities

Tariff %

Rum and tafia

150

Vodka, Whiskies

Wine; still, in containers holding more than 2 litres
Wine; still, in containers holding 2 litres or less

Gin and geneva

Liqueurs and cordials

Spirits obtained by distilling grape wine or grape marc

Spirits, liqueurs and other spirituous beverages;

Undenatured ethyl alcohol; of an alcoholic strength by volume of 80 percent vol. or higher

Beer; made from malt

100

Vegetable oils; coconut (copra) oil and its fractions, other than crude, whether or not refined, but not chemically modified

45

Vegetable oils; sunflower seed or safflower oil and their fractions, other than crude, whether or not refined, but not chemically modified

40.5

Vegetable oils; linseed oil, cotton-seed and its fractions, other than crude, whether or not refined, but not chemically modified

40

Vegetable oils; soya-bean oil and its fractions, other than crude, whether or not refined, but not chemically modified

38.75

Vegetable oils; ground-nut oil and its fractions, other than crude, whether or not refined, but not chemically modified

38.3

Vegetable oils; olive oil and its fractions, other than virgin, whether or not refined, but not chemically modified

37.5

Other vehicles, with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, capable of being charged by plugging to external source of electric power

125

Vehicles; spark-ignition internal combustion reciprocating piston engine

Vehicles; for transport of persons (other than those of heading no. 8702) including station wagons and racing cars

Motorcycles (including mopeds) and cycles; fitted with an auxiliary motor, reciprocating internal combustion piston engine,

100

Flowers (including roses, orchids, lilies, chrysanthemums)

60

Dairy produce; milk and cream, concentrated, not containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content exceeding 1.5 percent (by weight)

60

Dairy produce; cheese (not grated, powdered or processed)

Butter

40

Honey; natural

60

Source: World Integrated Trade Solutions, World Bank

The dossier notes India has raised tariffs on telecom equipment, medical devices, solar products, automotive parts, and processed foods, creating uncertainty for US exporters. It also pointed to restrictions on foreign direct investment (FDI), trade barriers in the insurance sector, and internet shutdowns hindering US digital services.

Trump’s rationale behind the tariffs

Trump criticized the disparities in trade policies, highlighting that while the US imposes a minimal 2.4 percent tariff on imported motorcycles, other nations charge significantly higher rates.

MFN Tariff Applied by the US on Imports from India as of 2022

Commodities

Tariff %

Base metals, silver or gold, clad with platinum; not further worked than semi-manufactured

10

Ferro-alloys; ferro-silico-chromium

Jewelry; of silver, whether or not plated or clad with other precious metal, and parts thereof

8.2

Machine-tools; gear cutting, gear grinding or gear finishing machines, working by removing metal, sintered metal carbides or cermet

5.09

Machine-tools; sharpening (tool or cutter grinding) machines, numerically controlled

4.4

Machine-tools; sawing or cutting-off machines, working by removing metal, sintered metal carbides or cermets

Dairy produce; milk and cream, containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content exceeding 1.5% (by weight)

30.84

Dairy produce; buttermilk, curdled milk or cream, kephir, fermented or acidified milk or cream, whether or not concentrated or containing added sweetening, flavouring, fruit or cocoa (excluding yoghurt)

56.46

Vegetables: onions, whole, cut, sliced, broken or in powder but not further prepared, dried

25.54

Titanium; other than unwrought

10.25

Aluminum; structures

 5.6

Iron or steel; threaded coach screws

12.5

Track suits; of synthetic fibers, knitted or crocheted

28.2

Garments: of man-made fibers, knitted or crocheted

25.03

Footwear, covering the ankle, with outer soles and uppers of rubber or plastics

29.51

Footwear; waterproof, rubber or plastic outer soles and uppers (not assembled by stitch, rivet, nail, screw, plug or similar)

27.5

Sports footwear; tennis shoes, basketball shoes, gym shoes, training shoes and the like, with outer soles of rubber or plastics and uppers of textile materials

21.3

Footwear; outer soles of leather or composition leather, uppers of textile materials

20.8

Source: World Integrated Trade Solutions, World Bank

Indian industries that rely heavily on US exports for commodities—including seafood, dairy, wine, diamonds, electronics, and chemicals—are expected to face the most significant disruptions. With the latest tariff norms coming into effect April 5, 2025, Indian sectors like pharmaceuticals and chemicals face an 8.6 percent tariff gap, plastics 5.6 percent, textiles 1.4 percent, jewelry 13.3 percent, and automobiles 23.1 percent. This discrepancy places Indian exporters at a disadvantage, increasing costs and reducing competitiveness in the US market.

Trump’s tariff impact on India-US trade relations

The full impact of Trump’s tariff policies on India’s economy remains to be seen. The US is India’s largest trading partner, with the latter consistently maintained a surplus in merchandise trade with the US for several years.

India's-Trade-Surplus-with-the-US-(Value-in-US$-Million)

*For the FY 2024-25, India’s trade data is available on the Department of Commerce, Government of India’s website for the period from April 1, 2024, to December 31, 2024. The full financial year data is expected to be released in the coming months.

India’s merchandise exports to the US in FY2023-24 totaled approximately US$77 billion, with key contributors from the following sectoral commodities:

  • Pearls, gems, and jewelry: US$9.9 billion
  • Pharmaceuticals: US$8 billion
  • Petrochemicals: US$4 billion

India’s Commodities Exports to the US (Value in US$ Million)

S.No.

Commodity

FY 2023-24

FY 2024-25* (Apr-Dec)

1.

Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts.  

11,081.13

8,927.23

2.

Natural or cultured pearls, precious or semiprecious stones, precious  metals, clad with precious metal and articles thereof; imitation jewlry; coin.  

9,948.50

7,025.01

3.

Pharmaceutical products  

8,079.95

6,601.40

4.

Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof.  

6,166.51

4,941.57

5.

Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes.  

5,832.94

3,274.43

6.

Articles of iron or steel  

2,793.57

2,234.47

7.

Other made up textile articles; sets; worn clothing and worn textile articles; rags  

2,782.06

2,197.66

8.

Articles of apparel and clothing accessories, knitted or corcheted.  

2,215.19

1,989.98

9.

Vehicles other than railway or tramway rolling stock, and parts and accessories thereof.  

2,647.57

1,945.36

10.

Organic chemicals  

2,408.30

1,897.87

11.

Articles of apparel and clothing accessories, not knitted or crocheted.  

2,503.86

1,803.00

12.

Fish and crustaceans, molluscs and other aquatic invertabrates.  

1,903.86

1,570.30

13.

Plastic and articles thereof.  

1,446.29

1,252.81

14.

Carpets and other textile floor coverings.  

1,088.01

914.31

15.

Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishing; lamps and lighting fittings not elsewhere specified

1,100.85

857.52

Source: Department of Commerce, Ministry of Commerce and Industry, GoI

The implementation of these tariffs could severely impact industries including agriculture, electronics, pharmaceuticals, medical equipment, and machinery. The Global Trade Research Initiative (GTRI) reported that India’s fish, meat, and seafood exports (US$2.58 billion in 2024) would face a tariff hike of 27.83 percent, while processed food, sugar, and cocoa exports (US$1.03 billion) could suffer from an additional 24.99 percent tariff burden.

India’s Major Imported Commodities from the US (Value in US$ Million)

S.No.

Commodity

FY 2023-24

FY 2024-25* (Apr-Dec)

1

Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes.  

12,963.57

11,305.05

2

Natural or cultured pearls,precious or semiprecious stones,pre.metals,clad with pre.metal and artcls thereof;imit.jewlry;coin.  

5,161.49

4,251.72

3

Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof.  

3,751.52

3,196.37

4

Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers,and parts.  

2,383.58

2,399.84

5

Optical, photographic cinematographic measuring, checking precision, medical or surgical inst. And apparatus parts and accessories thereof;  

1,944.23

1,522.91

6

Plastic and articles thereof.  

1,632.40

1,209.90

7

Aircraft, spacecraft, and parts thereof.  

2,256.26

1,206.22

8

Ships, boats and floating structures.  

61.65

1,028.21

9

Organic chemicals  

1,469.84

990.80

10

Miscellaneous chemical products.  

1,152.40

939.55

11

Iron and steel  

1,045.76

604.00

12

Vehicles other than railway or tramway rolling stock, and parts and accessories thereof.  

598.79

460.82

13

Beverages, spirits and vinegar.  

291.03

316.92

14

Pharmaceutical products  

393.05

308.42

15

Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, or radi. Elem. Or of isotopes.  

355.99

241.39

Source: Department of Commerce, Ministry of Commerce and Industry, GoI

The tariff structure imposed by the US on Indian goods varies across sectors, with some industries facing significantly high import duties. Indian dairy exports, for example, face exceptionally high tariffs, with buttermilk and fermented milk products taxed at 56.46 percent and milk powder at 30.84 percent. Other categories affected include onions (25.54 percent), garments (up to 28.2 percent), and footwear (ranging from 20.8 percent to 29.51 percent). Meanwhile, industrial goods like iron, steel, and machinery components face tariffs between 5 percent and 12.5 percent. These barriers pose significant challenges for Indian exporters, making it difficult to compete in the US market.

Potential benefits of US tariffs for India

Despite these challenges, some economists believe India remains one of Asia’s more resilient economies amid escalating trade tensions. As per a research analysis released in March 2025 from Nomura suggests that India’s domestic demand-driven economy could mitigate broader risks.

Meanwhile, Morgan Stanley analysts believe that indirect effects, such as reduced corporate confidence and trade uncertainty, may pose a greater challenge than direct trade restrictions.

Additionally, some reports suggest that India might benefit from trade diversion as American buyers seek alternative suppliers. India’s growing role as a manufacturing alternative to China, along with its “Make in India” initiative, could provide a competitive edge in the electronics, pharmaceutical, and textile industries.

US tariff implications on Indian industries

The imposition of US tariffs on Indian exports carries significant consequences for multiple industries, ranging from technology and automobiles to textiles and jewelry.

The gems and jewelry industry faces a particularly uncertain future, as the US is India’s largest market for jewelry exports, accounting for 30 percent of total shipments. While cut and polished diamonds currently enjoy duty-free access, any modification to this arrangement could disrupt trade flows and affect Indian jewelry manufacturers.

According to Statista, in FY 2023-25, the US was the largest export destination for the Indian automobile components industry, accounting for 27 percent of the total export value of US$21 billion.

India’s automobile sector is set to experience substantial pressure with the introduction of a 25 percent tariff on automobile imports, effective from April 5, 2025.  Further tariff extensions to components could challenge Indian auto manufacturers, potentially reshaping supply chains and diminishing their cost advantage in the US market.

Pharmaceutical exports, one of India’s strongest sectors in the US market, may also face pricing pressures due to increased tariffs. However, the essential nature of generic medicines may shield the industry from severe disruptions, as demand for cost-effective drugs remains steady.

The electronics and electrical machinery exports from India, particularly smartphones, are vulnerable to the proposed tariff increases, ranging from 1.2 percent to 10.8 percent. Over half of India’s electronics exports to the US comprise Apple iPhones assembled in India, meaning higher tariffs could drive up costs for US consumers and weaken demand, potentially affecting India’s manufacturing ambitions.

India’s textile and apparel industry, which derives 28 percent of its exports from the US, valued at US$9.6 billion in FY2024-25, is also at risk. The latest tariff annuncement could diminish India’s competitive pricing advantage, forcing manufacturers to explore alternative markets or absorb higher costs.

India’s response to US Tariffs

The central government has said it is assessing strategies to counter Trump’s trade policies:

  • Per media reports published on April 1, 2025, the Ministry of Commerce and Industry has developed models to evaluate tariff differences and is engaging with local manufacturers.
  • India is expected to launch an online platform in the coming months to record export restrictions encountered by Indian businesses.
  • India is considering negotiating a broader trade and investment agreement with the US, potentially offering tariff reductions on select products while strengthening domestic industries through production-linked incentives.
  • Efforts are underway to increase imports from the US in key sectors such as defense, aerospace, energy, and technology.
  • India is introducing enhanced incentives for industries like semiconductors, renewable energy, and aircraft components to attract US investment.

Since the initial tariff announcement in February 2025, India has been in negotiations with the US to seek favorable terms.

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