Editor’s Note
This article discusses the potential impact of new US tariffs on Indian exports, highlighting key sectors at risk and the geopolitical context behind the trade measures.
US President Donald Trump’s 25% tariff on Indian exports effective August 1 is expected to hurt a range of sectors—from apparel and generic drug makers to jewelry and auto component firms. Trump stated on the Truth Social platform that India’s tariffs were “among the highest in the World,” and criticized the country’s “most strenuous and obnoxious non-monetary Trade Barriers.” He also threatened an additional penalty due to India’s energy purchases from Russia.
Indian stocks and the rupee opened lower following the announcement. The benchmark NSE Nifty 50 Index fell as much as 0.9%, while the rupee opened 0.3% lower. The announcement dashes New Delhi’s hopes for preferential treatment, despite being an early trade talk partner. Vietnam faces a 20% tariff, Indonesia 19%, and Japan and South Korea 15%.
Bloomberg News reported that about 10% of total Indian exports could be affected from July to September if tariffs exceed 25%. Two-way trade between India and the US was estimated at $129.2 billion in 2024. Companies are assessing the impact on their business and supply chains, even those not directly dealing with US buyers.
The tariff is a “deeply concerning development” that could disrupt critical supply chains and threaten thousands of livelihoods, with the gems sector “severely impacted,” according to India’s Gem and Jewellery Export Promotion Council.
The US accounts for over $10 billion worth of India’s exports from this industry.
India is the largest exporter of non-patented drugs to the US, with an annual value of about $8 billion. Shares of major companies like Sun Pharmaceutical Industries Ltd., Dr. Reddy’s Laboratories Ltd., and Cipla Ltd. fell as they derive at least 30% of revenue from the US.
He added that pharma firms have been preparing by acquiring US assets. According to IQVIA, Indian companies supplied 4 out of 10 US prescriptions in 2022, providing nearly $220 billion in savings to the US healthcare system that year and $1.3 trillion in the decade through 2022.
Indian home fabrics, apparel, and shoe makers serve the global supply chains of major US retailers like The Gap Inc., Pepe Jeans, Walmart Inc., and Costco Wholesale Corp. Shares of Vardhman Textiles Ltd., Welspun Living Ltd., and Indo Count Industries Ltd. fell 6% to 7.4% in early Mumbai trading.
Vardhman noted in an earnings call that US business had been slow due to tariff uncertainty.
India became the top source of US smartphones after Apple shifted iPhone assembly there. However, this could be at risk.
The impact may not be immediate as smartphones were previously exempted from reciprocal tariffs. The US has launched probes into sectors like semiconductors under national security reviews. Until these are complete, smartphone exports face no levies, but if Trump uses Section 232 powers, it could force Apple to squeeze suppliers, including those in India.
Shares of state-run refiners like Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp. fell, along with private sector firm Reliance Industries Ltd., which dropped as much as 2%.
