Trump’s new 25% tariff on Indian exports may severely impact key sectors like pharma, gems, electronics, and textiles.
US President Donald Trump's move to impose a 25% tariff on Indian imports from August 1 has caused serious worries in sectors across the board. The surprise move is against major Indian sectors—pharmaceuticals, electronics, gems and jewelry, textiles, and oil refining, Trump referred to India's tariffs as "the most strenuous and obnoxious," blaming it for imposing high tariffs and excessive non-monetary restrictions
He also cautioned about additional sanctions as a result of India's oil imports from Russia and this move negates India's recent diplomatic efforts and would likely damage approximately 10% of India's overall exports in the July to September quarter.
The US market alone is worth more than $10 billion in Indian gems and jewelry exports, but the 25% tariff would increase prices, slow down shipments, and destabilize the whole supply chain. The Gem and Jewlery Export Promotion Council termed it a "deeply concerning development" threatening thousands of livelihoods from workers to large manufacturers, the whole ecosystem could feel the pinch.
India sends approximately $8 billion of non-patented medicines to the US annually. Large corporations such as Sun Pharma, Cipla, and Dr. Reddy's depend significantly on the US for revenues. Indian firms actually provided 40% of all US prescriptions in 2022 and their low-cost generic medicines saved the US healthcare system $220 billion in 2022 alone where this duty threatens to disrupt a vital global health supply chain.
Indian apparel manufacturers export to global brands such as Gap, Walmart, and Costco. Indian exporters are now losing their edge with Vietnam only paying 20% tariffs. Firms like Vardhman Textiles, Welspun, Indo Count, and Arvind Fashions are preparing themselves for a difficult quarter. Industry experts say that this tariff would challenge Indian exporters' resilience.
Apple had transferred significant iPhone production to India to sidestep China tariffs. But a 25% US tariff on Indian electronics now threatens to upend that plan. Bloomberg Intelligence analysts note this surcharge could compel Apple to reassess sourcing plans. This might also threaten India's growing position as a global electronics hub.
India imports roughly 37% of its oil from Russia at subsidized prices right now. Refiners such as Indian Oil, Bharat Petroleum, and Reliance Industries rely on this supply to maintain high refining margins. Trump's threat of additional sanctions for Russian oil imports will potentially drive import prices up and damage profits. Reliance, India's largest importer of Russian oil, stands to be directly impacted.
