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 come back into impact inside 21 days — shall be stacked on high of the 25% tariffs on New Delhi due Thursday stateside, based on 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 shall be vastly undermined,” Shilan Shah, deputy chief rising markets economist at Capital Economics, stated in a word. He estimates that the U.S. spending drives round 2% of India’s GDP and the additional 25% tariff is “massive sufficient to have a fabric affect.” India counts the U.S. as its single largest export associate. Its whole items’ exports reached about $434 billion within the 12 months ended March 2025, and almost 20%, or $86.51 billion price of products had been shipped to the U.S., based on the most recent official information. The ensuing drop in exports as a result of tariffs would imply the economic system grows by nearer to six% this 12 months and subsequent, relatively than the 7% development forecast previous to Trump’s announcement, Shah stated. The potential 50% further tariff on Indian merchandise might put a drag of a complete 0.6 share level on its GDP, based on Goldman Sachs’ estimates. India’s main exports to the U.S. are engineering and digital items, medication and prescribed drugs, gems and jewellery, based on the federal government information. With notable variance throughout industries and little readability over Trump’s plans with sector-specific tariffs, listed below are segments that probably stand to lose essentially the most: Engineering items Engineering items, together with merchandise like auto elements, energy tools and industrial equipment, have been India’s largest of exports to the U.S. and globally, hitting almost $117 billion within the 12 months ended March. Round 19.16 billion price of those industrial items, or about 16%, had been bought 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 massive on its different segments. India’s whole items exports jumped 1.92% in June, partly 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 employees, based on a July report by a state-backed trade physique. About 33% of India’s gems and jewellery exports went to the U.S. in fiscal 12 months 2025. Rajesh Mehta, government chairman of Indian jewellery maker Rajesh Exports, stated in an interview with CNBC Wednesday that greater tariffs shall be an “extra burden,” whereas calling for presidency assist for the sector . Textiles is among the many most labor-intensive sectors in India, immediately using about 45 million employees throughout the nation. Much like gems and jewellery, round 34% of textile exports went to the U.S. within the final fiscal 12 months. “Surely, the brand new tariff price 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 major responsibility differential benefit vis-à-vis many different international locations, besides Bangladesh, with whom we compete for a bigger share of the US market,” the Confederation of Indian textile trade stated in an announcement dated July 30 , earlier than the most recent hike in duties was introduced. Electronics India’s electronics sector relied on the U.S. for 38% of its exports final fiscal 12 months, making it “essentially the most uncovered” to potential dangers of the tariff exemptions being rolled again, based on Alexandra Hermann, lead economist at Oxford Economics. India overtook China to change into the highest exporter of smartphones bought 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 serious, though momentary, reprieve for corporations similar 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 12 months, and its exports in March alone greater than doubled to $2.76 billion from a 12 months 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 stated he would initially impose a “small tariff” on pharma, after which increase that price to as excessive as 250% in just a few years. India’s pharma sector has a excessive dependency on U.S. consumers, with its medication and pharma exports to the U.S. reaching over $10.5 billion for the 12 months ended March 2025, accounting for almost 35% of the class’s whole shipments, based on the official information. “[India’s] Chemical substances general have considerably much less US publicity however this masks the excessive pharmaceutical sector’s US dependency therein,” stated 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 via a separate government order. Total competitiveness “The U.S. might extra simply supply for provides from various import areas, however it’s a lot more durable for India to diversify away from the U.S. throughout completely different sectors,” stated Michael Wan, senior economist at MUFG Financial institution. India competes in opposition to the likes of Europe in prescribed drugs; Vietnam and Mexico in electronics; Cambodia, Sri Lanka, Bangladesh and Vietnam in textiles; and Israel in gems and jewellery, based on Wan. “If these tariff differentials stick, India’s export competitiveness will doubtless be eroded over time,” he stated. 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, based on MUFG’s estimates, together with electronics and pharmaceutical merchandise. — CNBC’s Ayushi Jindal contributed to this story.
