US Tariff on India: What are the Affected Products, Rates, Impact, and India’s Response
- PRITI SIRDESHMUKH
- Oct 6
- 8 min read
The tariff war has been escalating across the globe since President Trump came into power in the US. Like most countries, India is feeling the heat, perhaps more than the rest. A 25% tariff on Indian imports was first announced by President Donald Trump. However, he signed an executive order recently that slapped an extra 25% duty because India buys Russian oil, increasing the total amount of tariffs the United States has placed on its partner to 50%. According to the Indian government, the taxes will affect shipments valued at $48.2 billion. Authorities have cautioned that the additional taxes may render shipments to the United States economically unfeasible, leading to job losses and a slowdown in economic expansion. India's economy, one of the largest and fastest-growing in the world, would slow down as a result. Therefore, it is important to understand the ongoing and long-term impact on the country as a whole.
Table of Contents
Understanding India-US Trade Relations
With bilateral trade expected to exceed $190 billion in 2024, the US and India have a strong business partnership. The top three items that India sells to the US are:
Pharmaceuticals ($8.1 billion)
Telecom instruments ($6.5 billion)
Precious stones ($5.3 billion)
Notably, the US has a $45.7 billion trade imbalance with India. In the past, trade talks have sought to rectify this disparity, with India lowering duties on American products like motorbikes and bourbon whisky. Sections 232 (national security) and 301 (unfair trade practices) of US trade rules provide justification for the current levies, which also represent geopolitical factors connected to India's purchases of Russian oil and BRICS membership.
Additional Tariffs Levied on Indian Imports by the US
On August 6, 2025, US President Donald Trump declared that higher taxes would be applied to Indian items that are imported into the US starting on August 27, 2025. This comes after a 25% tariff was imposed on August 1, 2025, to target India's ongoing purchases of Russian oil in the midst of geopolitical tensions over the crisis between Russia and Ukraine. The United States imposed the highest tariffs on any other trading partner. India is quite concerned about these high tariffs since they jeopardise their $87 billion worth of exports to the US and are straining ties between the two nations.
Chronology of US Tariff Implementation on Indian Products
The following table shows the major tariff implementation events on Indian products by the US government in chronological order:
Date (2025)
| Event
| Tariff Announcement
|
April 2 | Announcement of reciprocal tariffs | A 26% tariff on Indian goods was initially announced by the US, and later adjusted to 25%. |
April 5 | Implementation of baseline tariff | A 10% baseline tariff was implemented on all imports, including those from India. |
April 9 | Delay of country-specific tariffs | The country-specific tariff of 16% for India was delayed for 90 days (until July 9). |
July 8 | Extension of delay in implementation | The delay period for country-specific tariffs was further extended to August 1. |
July 30 | Announcement of 25% tariff plus penalty | A 25% tariff on Indian goods announced by the US, effective August 7, with an unspecified penalty for buying Russian oil. |
August 1 | Initial 25% tariff | A 25% tariff (10% baseline + 15% reciprocal) applied to Indian products |
August 7 | Executive order for 25% tariff implementation | An executive order issued by the White House confirming a 25% tariff on Indian goods, effective immediately. Only pharmaceuticals, electronics, and energy are exempted. |
August 27 | An additional 25% tariff implemented | An additional 25% tariff was implemented, taking the total to 50% for most Indian products (except exempted sectors). |
October 5 | Grace period for in-transit products | Goods loaded onto ships before August 7 and arriving in the US before October 5 will have a 25% tariff rate, not a 50% rate. |
Indian Products Affected by New US Tariff Rates
Product Category
| Tariff Rate (August 7, 2025)
| Tariff Rate (August 27, 2025)
|
Gems & Jewellery | 25% | 50% |
Textiles & Apparel | 25% | 50% |
Iron, Steel, Aluminium | 25% (5–12.5% for industrial goods) | 50% (30–37.5% for industrial goods) |
Marine Products | 33.26% (25% + 2.49% anti-dumping + 5.77% countervailing) | 58.26% (50% + 2.49% + 5.77%) |
Leather & Footwear | 25% (20.8–29.51% for footwear) | 50% (45.8–54.51% for footwear) |
Agricultural Products | 25% (e.g., onions at 25.54%) | 50% (e.g., onions at 50.54%) |
Automobiles & Auto Parts | 25% | 50% |
Machinery & Engineering Goods | 25% | 50% |
Chemicals (Organic) | 25% | 50% |
Dairy Products | 56.46% (buttermilk, fermented milk); 30.84% (milk powder) | 81.46%; 55.84% |
Rubber Items | 25% | 50% |
Ceramic, Glass, Stone | 25% | 50% |
Furniture | 25% | 50% |
Paper & Wood Products | 25% | 50% |
Pharmaceuticals | 0% | 0% |
Energy Products | 0% | 0% |
Critical Minerals | 0% | 0% |
Electronics & Semiconductors | 0% | 0% |
Tariff Structure of 50% on Indian Goods
Trump declared a 25% reciprocal tax on April 2, 2025, and an extra 25% tariff that will take effect on August 27, 2025, in addition to the base 10% charge on Indian imports. India and Brazil are subject to the highest tariff rate of 50%, in contrast to China, which is 30%, or Vietnam and the Philippines, which are 20%. Pharmaceuticals, semiconductors, energy resources (natural gas and crude oil), and essential minerals are exempt from certain of the rules, protecting important industries like India's generic medication exports, which make up half of the US market.
Tariff Components and Breakdown
Instead of being a single rate, the 50% total tariff consists of a baseline, a reciprocal, and an additional tariff:
All U.S. imports, including those from India, are subject to the 10% baseline tariff as part of a larger trade policy. This is what forms the baseline tariff.
The initial effective rate is raised to 25% (10% baseline + 15% reciprocal) with the country-specific adjustment for India known as the reciprocal tariff (15%). The purpose of this was to mimic the alleged high Indian taxes on American goods.
India's imports of Russian oil have resulted in the imposition of an additional 25% penalty tariff, raising the overall rate for the impacted items to 50%.
Due to current anti-dumping or countervailing duties, the structure may differ somewhat per commodity, which could raise rates (for example, up to 58.26% for certain marine products).
US Tariffs as a Pressure Strategy Amid Geopolitical Tensions
Indian financial markets reacted warmly to the announcement of the additional 25% tax, as seen by the Sensex and Nifty climbing on August 7, 2025. Due to their limited exposure to the US, IT services, FMCG, and finance were mostly protected, while sectors like textiles, automobiles, and gems and jewellery were heavily impacted. Nonetheless, the Nifty Pharma index rose by 2.73% as a result of the tariff-free status of pharmaceuticals. Foreign institutional investor (FII) flows are now unstable due to the increased risk of capital flight brought on by currency depreciation.
Economic Impact of Tariff Hike on India
The economic impact of the US tariff on India is likely to be significant. Here are the ways it may hurt the Indian economy:
GDP Reduction: If tariffs continue, analysts predict a 0.2–0.8 percentage point decrease in growth. In particular, there can be a 0.3 percentage point hit, which may reduce FY26 growth from 6.3% to about 6%. Due to the minimal exposure of US-bound goods exports (2.3% of GDP), some sources estimate the impact to be 0.2% of GDP.
Export Losses: Vulnerable volumes are anticipated to be $8 billion, accounting for about 55% of India's goods exports to the US ($47–48 billion). It's like a "trade embargo," rendering a lot of things unprofitable. Shrimp exports of $2 billion are among the specific hits.
Job Losses and Wider Effects: Labour-intensive industries may experience a large number of layoffs, especially in MSMEs and areas like Gujarat, a jewellery hub, where gold prices have increased and orders have decreased. Millions of textiles and diamonds are at jeopardy, although exact employment numbers are not accessible. They will also face stiff competition from businesses in Bangladesh and Vietnam, where tariffs are cheaper. Fiscal balances are strained by indirect consequences, such as increased import costs for US-dependent supply chains (such as Boeing parts, where India serves as both a supplier and a customer).
Impact of US Tariffs on the Indian Stock Market
After the announcement of the additional 25% tax, Indian financial markets responded favourably to the day, with the Sensex and Nifty rising on August 7, 2025. While IT services, FMCG, and banking remained somewhat shielded due to little US exposure, industries such as gems and jewellery, autos, and textiles suffered substantial pressure. However, because pharmaceuticals are free from tariffs, the Nifty Pharma index increased by 2.73%. Currency depreciation has increased the danger of capital flight, causing foreign institutional investor (FII) flows to become unstable.
India’s Response to US Tariffs
India's Ministry of External Affairs emphasised the nation's sovereign right to make energy decisions while denouncing the levies as "unfair, unjustified, and unreasonable." India is taking a multifaceted approach instead of launching a quick counterattack.
The government is still dedicated to reaching a fair bilateral trade agreement, and talks are scheduled to begin in the autumn of 2025.
In order to mitigate the effects of global demand shocks, Prime Minister Narendra Modi has pushed domestic goods.
Piyush Goyal, the minister of commerce, has suggested policies such as interest subsidies, loan guarantees, and lower certification costs for MSMEs, but he has rejected direct subsidies.
To lessen reliance on the US, industry titans like Anand Mahindra support investigating new markets.
India has also called attention to the hypocrisy of the West, pointing out that the US and EU continue to trade with Russia while exerting pressure on India.
Negotiations and Tariff Delays: Is There a Chance of Resolution?
Both nations have an opportunity to negotiate and try to reach an agreement because the US is delaying the additional 25% tax by 21 days. The tariffs could be reduced to roughly 15–20% if they agree. However, some difficult subjects, such as dairy and farming, are challenging to resolve. India must strike trade agreements while also safeguarding its farmers and small enterprises. These duties also demonstrate that the World Trade Organisation (WTO) is not always able to resolve issues promptly, and India may retaliate with tariffs of its own. In order to avoid becoming trapped in this predicament again, India may eventually try harder to become self-sufficient and sell its goods to more nations.
Conclusion
India's economy and export sectors are negatively impacted by the US's 50% tax, particularly small enterprises, textiles, and gems. With deliberate diplomacy, industrial assistance, and market research, India is reacting. To safeguard its interests in a world that is changing, it must continue to be powerful and astute.
Frequently Asked Questions
What is the 50% tariff on India?
Citing India's ongoing purchases of Russian oil, the United States launched a strategy known as the "50% tariff on India," which imposes import duties of up to 50% on Indian goods in two waves of 25% each. It has a major effect on industries including jewellery, textiles, diamonds, and auto parts, which could lower India's GDP growth and export competitiveness.
What are the reasons for tariffs?
Trump implemented tariffs in an effort to increase American manufacturing, generate employment, and close trade deficits.
Which Indian products are subject to the 50% US tariff?
Trump has imposed a 50% tariff on certain imports. Agricultural Products, Machinery & Engineering Goods, Ceramic, Glass, Stone, Rubber Items, Paper & Wood Products, Furniture & Dairy Products, Marine Products, Chemicals (Organic), Textiles & Apparel, Leather & Footwear, Cars & Auto Parts, Iron, Steel, Aluminium
Does the Indian economy depend on the USA?
Although the US is a significant commercial partner for India, there are some economic ties in which India is dependent on the US, such as in terms of overall trade and specific industries like IT and pharmaceuticals.
