The impact of former U.S. President Donald Trump's tariffs on India is a subject of ongoing analysis, with recent trade data and expert opinions offering insights into the economic consequences. In August 2025, several factors, including these tariffs, have influenced India's trade dynamics.

Potential GDP Impact and Expert Opinions

Chief Economic Adviser (CEA) V. Anantha Nageswaran estimates that the 50% tariffs imposed by the Trump administration could reduce India's GDP growth by 0.5% to 0.6%. He noted that if the tariffs persist, the impact could be more significant. While the US tariffs affect export competitiveness, India's growth relies more on domestic consumption. Other experts suggest the tariff impact could be limited to 30-90 basis points. Shashi Tharoor, an Indian Member of Parliament, has also stated that Trump's tariffs are hurting India, leading to job losses in sectors like gems, jewellery, seafood, and manufacturing.

Trade Data and Analysis

India's merchandise trade deficit is expected to have modestly narrowed in August 2025 to USD 26.1 billion, according to a Union Bank of India report. This narrowing was primarily driven by a surge in gold demand ahead of the festive and wedding season. Despite higher prices, gold imports nearly doubled last month, providing a lift to trade activity.

However, data indicates a more complex picture regarding the impact of the tariffs. India-US air exports experienced a collapse after the 50% tariffs were implemented. While there was a rush to export goods before the tariffs took effect, volumes plunged in the weeks following their implementation, leading to a shift in trade to Europe and Asia.

Impact on Specific Sectors

Several sectors are expected to be significantly affected by the tariffs. These include:

• Textiles and Apparel: This sector is likely to face considerable challenges due to the high tariffs, with concerns about factory closures and job losses.
• Gems and Jewellery: This sector, which relies heavily on the US market, is also expected to experience a decline in exports.
• Seafood: The US is a major market for Indian shrimp exporters, and the tariffs could lead to a sharp decline in export volumes.

India's Response and Trade Relations

The Indian government has labeled the US tariffs as "unfair, unjustified, and unreasonable". To mitigate the impact, India is focusing on strengthening domestic demand, diversifying exports, and seeking new trade partners in Africa, Latin America, and East Asia. India is also engaging in trade negotiations with the European Union and reaching out to 40 key markets.

Despite the trade tensions, the overall economic relationship between India and the US remains strong. In FY25, the bilateral trade between India and the US stood at a record US$ 132.2 billion. The US is India's largest trading partner and one of the few countries with which India has a trade surplus.

Geopolitical Factors

The US has accused India of undermining efforts to end the war in Ukraine by purchasing oil from Russia. This has led to additional tariffs on India's crude oil trade with Russia. However, India has defended its energy procurement decisions as being driven by national interest and global market dynamics. In August 2025, India's crude oil imports from Russia reached €2.9 billion, nearing China's levels.

Conclusion

The Trump tariffs have had a multifaceted impact on India's economy. While some sectors have experienced declines in exports and job losses, India is actively pursuing strategies to diversify its trade relationships and strengthen domestic demand. The August trade data and ongoing analysis will provide further clarity on the long-term effects of these tariffs and India's ability to adapt to the changing global trade landscape.