The sharp hike in tariffs by the US has created serious challenges for Indian exporters, especially micro, small and medium enterprises (MSMEs).
US President Donald Trump has imposed an additional 25% tariff on Indian goods. With this, the total tariff on Indian exports to the US has gone up to 50%.
This decision is reportedly a response to India’s continued purchase of oil from Russia.
The 25% tariff announced on 31 July 2025 came into effect from 7 August, and the extra 25% will be effective from 27 August 2025 (21 days later).
Impact on Key Export Sectors
Trump’s move could severely affect India’s textiles, marine products, and leather exports. India has called the decision unfair and unwise, but concerns remain — especially for MSMEs that heavily depend on the US market.
However, items already under concessional tariff categories will be exempted.
Sectors Most Affected
These tariffs are expected to hit sectors such as:
Textiles and apparel
Gems and jewellery
Shrimp and marine products
Leather and footwear
Animal products
Chemicals
Electricity-related goods and machinery
However, some sectors are exempt, including:
Pharmaceuticals
Energy products (like crude oil, natural gas, refined fuel, coal, and electricity)
Critical minerals
Electronics and semiconductors
GTRI: Exports May Drop by 40–50%
According to think tank GTRI, the new tariffs will make Indian goods too expensive in the US market. This may cause Indian exports to drop by 40–50%.
Here are the new tariff rates for some major products:
Knitted apparel – 63.9%
Woven apparel – 60.3%
Textiles and made-ups – 59%
Organic chemicals – 54%
Carpets – 52.9%
Furniture, mattresses – 52.3%
Diamonds and gold items – 52.1%
Machinery – 51.3%
$86 Billion in Exports at Risk
Exporters warn that this move could seriously impact India’s exports worth $86 billion to the US.
In June 2025, India’s exports to the US rose 23.53% to $8.3 billion.
Imports from the US fell 10.61% to $4 billion.
During April–June 2025, India exported $25.51 billion to the US (up 22.18%) and imported $12.86 billion (up 11.68%).
In FY 2024–25, India received $5.45 billion in FDI from the US.
Overall, India-US bilateral trade reached $131.8 billion in FY 2024–25:
India’s exports: $86.5 billion
Textiles & apparel: $10.3 billion
Gems & jewellery: $12 billion
Shrimp: $2.24 billion
Leather & footwear: $1.18 billion
Chemicals: $2.34 billion
Machinery: $9 billion
India’s imports from the US: $45.3 billion
India at a Disadvantage Compared to Other Countries
Following the hike, the highest US tariff (50%) will now apply to goods from India and Brazil. This gives other exporting nations a competitive edge in the US market:
Myanmar – 40%
Thailand & Cambodia – 36%
Bangladesh – 35%
Indonesia – 32%
China & Sri Lanka – 30%
Malaysia – 25%
Philippines & Vietnam – 20%
Hope from Trade Talks
India and the US are currently in talks for a Bilateral Trade Agreement (BTA). The sixth round of discussions is set to begin when the US team visits India on August 25.
