Trump’s 25 % Tariffs: US President Donald Trump has slapped a 25 per cent duty on Indian imports from August 1, in addition to a penalty for India’s continued trade relations with Russia. The action is putting pressure on New Delhi ahead of a planned trade negotiation round on August 25. The US invokes India’s high tariffs, non-monetary trade restrictions, and close defense and energy cooperation with Moscow as grounds. India is now confronted with a double danger — a precipitous tariff wall for exports to its largest market and diplomatic tension over its strategic reliance on Russia.
What the US Buys Most from India
The US relies on India for a broad spectrum of products. These include cheap generic medicines, quality gems and jewelry, electronic appliances, and textiles. US companies also depend on India for oil products, engineering items, organic chemicals, and basmati rice. Indian handicrafts, leather goods, and shoes also command considerable demand in America.
US-India Trade in Numbers
In 2024, US imports from India were worth $91.2 billion. India was the source of 18% of US goods imports. Nevertheless, trade was unbalanced. The US had a $45.7 billion goods trade deficit with India.
Highest-valued Indian imports were:
- Electrical and electronic equipment: $14.40 billion
- Pharmaceuticals: $12.73 billion
- Precious stones and metals: $11.88 billion
- Machinery and reactors: $7.10 billion
- Organic chemicals: $3.63 billion
- Mineral fuels and oils: $3.23 billion
- Textile articles and clothing: $3.10 billion
- Iron and steel items: $2.83 billion
- Motor vehicles (non-railway): $2.80 billion
- Apparel (non-knitted): $2.52 billion
Sectoral Impact: A Direct Hit on Core Exports
Indian industries that are major US export contributors will be directly affected by the 25% tariff. Pharmaceuticals, electronics, automotive components, and textiles experience a significant increase in cost. This may reduce their competitiveness, lower demand, and slice market share. A few US purchasers have already reduced orders, particularly during the critical Fall-Winter period.
Export-oriented sectors will feel the pinch more than domestic-focused industries. Companies in IT, textiles, and chemical manufacturing are already bracing for a downturn. Meanwhile, India could also face indirect heat from China. If Chinese exports reroute to Europe at cheaper prices, Indian goods will face tougher competition in those third-country markets.
Still Hope for a Trade Deal
In spite of tensions, an answer could be close at hand, a US delegation will travel to India on August 25 for the sixth round of negotiations on the eagerly anticipated Bilateral Trade Agreement (BTA) and both Prime Minister Modi and President Trump previously established that they were serious about settling trade disputes.
There’s a silver lining as well. India’s percentage of US electronics imports rose to 7.2% in May, while China’s dropped from 22% to 11%, this trend indicates that global trade flows can still present new opportunities for India — if it can move fast and negotiate well.
