An worker checks the inventory of medicines at a pharmacy retailer in Hyderabad on July 31, 2025.
Noah Seelam | Afp | Getty Photographs
India’s exports to the U.S. face a steep 50% tariff after U.S. President Donald Trump on Wednesday slapped a further 25% responsibility on Indian items over the nation’s oil purchases from Russia.
The additional duties — set to return into impact inside 21 days — will likely be stacked on high of the 25% tariffs on New Delhi due Thursday stateside, in accordance with the chief order.
Analysts are warning that the upper U.S. tariffs threat considerably diminishing the attract of Indian exports to the U.S., in comparison with regional friends.
“India’s attractiveness as an rising manufacturing hub will likely be vastly undermined,” Shilan Shah, deputy chief rising markets economist at Capital Economics, mentioned in a observe. He estimates that the U.S. spending drives round 2% of India’s GDP and the additional 25% tariff is “giant sufficient to have a fabric impression.”
India counts the U.S. as its single largest export associate. Its complete items’ exports reached about $434 billion within the yr ended March 2025, and almost 20%, or $86.51 billion price of products have been shipped to the U.S., in accordance with the newest official information.
The ensuing drop in exports as a consequence of tariffs would imply the financial system grows by nearer to six% this yr and subsequent, reasonably than the 7% progress forecast previous to Trump’s announcement, Shah mentioned.
The potential 50% further tariff on Indian merchandise might put a drag of a complete 0.6 share level on its GDP, in accordance with Goldman Sachs’ estimates.
India’s main exports to the U.S. are engineering and digital items, medication and prescription drugs, gems and jewellery, in accordance with the federal government information.
With notable variance throughout industries and little readability over Trump’s plans with sector-specific tariffs, listed here are segments that doubtlessly stand to lose essentially the most:
Engineering items
Engineering items, together with merchandise like auto components, energy gear and industrial equipment, have been India’s greatest of exports to the U.S. and globally, hitting almost $117 billion within the yr ended March.
Round 19.16 billion price of those industrial items, or about 16%, have been offered to the U.S. over that interval.
Exports of iron, metal, and different merchandise exports accounted for 17.07% of the overall engineering exports, whereas non-ferrous metals and merchandise exports contributed 10.52%. Metal exports already face 50% sectoral tariffs, worsening the outlook for the sector as the identical levy now looms giant on its different segments.
India’s complete items exports jumped 1.92% in June, partially pushed by the rise in engineering items, which rose 1.35% to $9.5 billion.
Gems, jewellery, textiles and apparels
The gems and jewellery, and textiles and apparels sectors, are additionally anticipated to be considerably jolted by the sudden hike in U.S. tariffs.
The gems and jewellery sector contributes 7% of India’s GDP and employs about 5 million staff, in accordance with a July report by a state-backed business physique.
About 33% of India’s gems and jewellery exports went to the U.S. in fiscal yr 2025.
Rajesh Mehta, govt chairman of Indian jewellery maker Rajesh Exports, mentioned in an interview with CNBC Wednesday that larger tariffs will likely be an “further burden,” whereas calling for presidency help for the sector.
Textiles is among the many most labor-intensive sectors in India, immediately using about 45 million staff throughout the nation. Just like gems and jewellery, round 34% of textile exports went to the U.S. within the final fiscal yr.
“Certainly, the brand new tariff fee goes to significantly check the resolve and resilience of India’s textile and attire exporters as we is not going to take pleasure in a big responsibility differential benefit vis-à-vis many different nations, besides Bangladesh, with whom we compete for a bigger share of the US market,” the Confederation of Indian textile business mentioned in a assertion dated July 30, earlier than the newest hike in duties was introduced.
Electronics
India’s electronics sector relied on the U.S. for 38% of its exports final fiscal yr, making it “essentially the most uncovered” to potential dangers of the tariff exemptions being rolled again, in accordance with Alexandra Hermann, lead economist at Oxford Economics.
India overtook China to turn into the highest exporter of smartphones offered within the U.S. within the second quarter, after Apple accelerated to maneuver its meeting of extra iPhones to the South Asian nation.
In a significant, though short-term, reprieve for corporations corresponding to Apple, Trump in April introduced to exempt smartphones, computer systems and different digital items from tariffs.
India’s U.S.-bound exports of digital items have accelerated this yr, and its exports in March alone greater than doubled to $2.76 billion from a yr earlier.
Prescription drugs
Whereas the pharmaceutical sector can be presently exempt from tariffs, Trump has threatened duties on pharma exports to the U.S. In an interview to CNBC Trump mentioned he would initially impose a “small tariff” on pharma, after which elevate that fee to as excessive as 250% in a couple of years.
India’s pharma sector has a excessive dependency on U.S. patrons, with its medication and pharma exports to the U.S. reaching over $10.5 billion for the yr ended March 2025, accounting for almost 35% of the class’s complete shipments, in accordance with the official information.
“[India’s] Chemical compounds total have considerably much less US publicity however this masks the excessive pharmaceutical sector’s US dependency therein,” mentioned Hermann, leaving the pharma sector extremely susceptible to Trump’s potential tariffs.
India additionally exported metal and aluminum to the USA, however commerce in these items is taxed by a separate govt order.
Total competitiveness
“The U.S. might extra simply supply for provides from different import places, however it’s a lot more durable for India to diversify away from the U.S. throughout totally different sectors,” mentioned Michael Wan, senior economist at MUFG Financial institution.
India competes towards the likes of Europe in prescription drugs; Vietnam and Mexico in electronics; Cambodia, Sri Lanka, Bangladesh and Vietnam in textiles; and Israel in gems and jewellery, in accordance with Wan. “If these tariff differentials stick, India’s export competitiveness will doubtless be eroded over time,” he mentioned.
Among the many export-reliant nations which have clinched preliminary offers with Trump, Vietnam noticed its tariffs lowered to twenty% from 46%. In his newest tariff adjustment, Trump additionally eased tariffs on Thailand to 19% from the “reciprocal” tariff degree of 36%, Bangladesh to twenty% from 35% and Cambodia to 19% from 36%.
Round 32% of India’s exports to the U.S. are presently exempt from tariffs, in accordance with MUFG’s estimates, together with electronics and pharmaceutical merchandise.
