The Federation of Indian Export Organisations (FIEO) has expressed grave concerns over the newly imposed tariffs by the United States on Indian goods, predicting a significant blow to Indian exports. Effective in three weeks, the additional 25% tariff, levied by US President Donald Trump in response to India's continued purchase of Russian oil, brings the total tariff on most Indian goods to 50%. This decision has been met with strong reactions, with the FIEO calling the move "extremely shocking".

According to the FIEO, this tariff hike will have a severe impact, affecting approximately 55% of India's shipments to the US market. The 50% reciprocal tariff places Indian exporters at a 30-35% competitive disadvantage compared to their counterparts in countries with lower tariffs. Director General of FIEO, Ajay Sahai, stated that many export orders have already been put on hold as international buyers reassess their sourcing plans due to the increasing costs.

Several sectors are expected to be particularly hard-hit by these tariffs. These include textiles, marine products, and leather, many of which are led by Micro, Small, and Medium Enterprises (MSMEs). Sahai emphasized that absorbing such a sudden cost escalation is simply not viable for many MSME-led sectors, where profit margins are already thin. The increased tariffs could force exporters to lose long-standing clients.

With the imposition of the 50% tariff, India now faces the highest import duty level into the US, alongside Brazil. This places India at a disadvantage compared to competitor countries with significantly lower duties, such as Myanmar (40%), Thailand and Cambodia (36% each), Bangladesh (35%), Indonesia (32%), China and Sri Lanka (30% each), Malaysia (25%), and Philippines and Vietnam (20% each). Sahai suggested that domestic exporters will need to actively seek alternative markets in light of these developments.

In the financial year 2024-25, bilateral trade between India and the US stood at $131.8 billion, with $86.5 billion in exports from India and $45.3 billion in imports. The US government has accused India of supporting Russia's war against Ukraine through its continued imports of crude oil. India's Ministry of External Affairs (MEA) has responded to the tariffs, deeming them "unfair, unjustified and unreasonable". The MEA has also stated that India will take all necessary actions to protect its national interests.

While some reports suggest the tariffs' impact on India's GDP and overall exports will be minimal, the FIEO maintains a more cautious outlook, emphasizing the challenges faced by exporters, particularly MSMEs. Exemptions to the tariffs exist for specific items, including steel and aluminum, and potentially pharmaceuticals.