Starting Wednesday, steep tariffs imposed by the United States are poised to significantly impact Indian exports, escalating trade tensions between the two nations. The US Department of Homeland Security has confirmed that a new 50% tariff will be levied on Indian goods, a move that has sent ripples of concern throughout India's export sector.
The implementation of these tariffs, effective from 12:01 a.m. EDT on August 27, 2025 (9:31 a.m. IST), marks a considerable increase from the previous 25% duty. This decision, formalized under Executive Order 14329, is largely attributed to the United States' disapproval of India's continued imports of Russian crude oil and defense hardware. White House trade advisor Peter Navarro and US Treasury Secretary Scott Bessent have explicitly accused India of indirectly funding Russia's war by increasing its oil imports.
The impact of these tariffs is expected to be broad-based, affecting a substantial portion of India's exports to the US. According to the Global Trade Research Initiative (GTRI), approximately $60.2 billion (66%) of the $86.5 billion worth of goods India ships to the US annually will now be subject to the 50% tariff. While some sectors like pharmaceuticals, electronics, and petroleum products will remain duty-free, labor-intensive sectors such as textiles, seafood, gems, jewelry, and leather will face the brunt of the new tariffs.
Experts predict a potential 70% plunge in exports from the affected sectors, which could translate to an overall 43% decline in India's shipments to the US. This could endanger hundreds of thousands of jobs across India's export hubs and potentially shave 0.5% off India's GDP.
Several sectors are bracing for significant challenges. The textiles and apparel industry, which contributed $37.7 billion to India's merchandise exports in 2024-25, stands to lose a considerable share of its US market, which absorbs approximately 29% of Indian textile and apparel exports. The gems and jewelry sector, with $10 billion in exports and a 40% reliance on the US market, also faces substantial risks, potentially leading to job losses in key centers like Surat and Mumbai. Similarly, the seafood industry, particularly shrimp exports worth $2.4 billion, is vulnerable, with farms in Visakhapatnam potentially facing significant challenges.
The Indian government has acknowledged the potential fallout and has promised financial assistance and incentives to exporters to diversify into other markets, including China, Latin America, and the Middle East. The Federation of Indian Export Organisations (FIEO) has expressed grave concern, stating that the decision will severely disrupt supplies to India's largest export market. FIEO estimates that nearly 55% of India's exports to the US, worth around $47–48 billion, will now face a pricing disadvantage of 30–35%, making them uncompetitive against rivals from other Asian countries.
There are a few exceptions to the new tariffs. Shipments that left India before August 27, 2025, and are cleared in the US before September 17, 2025, will not face the additional duty. Certain product categories, such as steel, aluminum, passenger vehicles, light trucks, copper products, humanitarian donations, and informational materials like books or films, are also excluded from the surcharge.
As India grapples with these new trade barriers, the focus is on adapting strategies, exploring alternative markets, and implementing policy reforms to mitigate the adverse impacts and maintain its position in the global trade landscape.
