Editor’s Note
The U.S. has announced a new 25% tariff on Indian goods, effective August 27, raising total duties on some imports to 50%. This analysis examines the sectors in India likely to bear the brunt of this trade measure.
The United States issued a public notification on Tuesday regarding the imposition of an additional 25% tariff on India. The new duties will take effect from 12:01 AM on August 27. This will bring the total tariff on Indian goods entering the US to 50%. The notice was issued by the Department of Homeland Security through US Customs and Border Protection (CBP). Let’s examine which sectors in India will be most impacted by this tariff.
The notification issued by the Department of Homeland Security stated that the additional 25% tariff on India will be effective from 12:01 AM on August 27, US time. This duty will implement the executive order signed by President Donald Trump on August 6. The notification clarifies that this step is in response to India’s heavy purchases of oil from Russia. Trump had previously imposed a 25% tariff effective from August 1.
Textiles (excluding ready-made garments) contribute about 26% to India’s total exports. The US is the largest market for India’s textile and apparel exports. India exports $10.3 billion (approximately ₹89,600 crore) worth of textiles and apparel to the US annually. Therefore, the textile industry could be the most affected by the increased tariffs. The Confederation of Indian Textile Industry (CITI) is deeply concerned about the potential impact of the tariffs.
The second major sector likely to be affected by the US tariffs is the gems and jewellery industry. India exported $9.2 billion (approximately ₹80,000 crore) worth of gems and jewellery to the US last year. The US accounts for about 33% of India’s total gem exports. The gem industry employs millions of people across India. The polished diamonds segment could be the most impacted by the tariffs.
It is noted that jobs have been lost across the entire industry due to halted shipments to the US.
India sends seafood worth ₹60,000 crore to the US annually, mostly shrimp (₹20,000 crore). The total tariff on Indian shrimp is now 60%. Due to this tariff, seafood exports could shrink to ₹24,000 crore.
India exported $48.82 million (approximately ₹4,245 crore) worth of iron and steel products to the US in 2024. India sends 100,000 metric tons of steel to the US every year, a small fraction of its annual steel production of 145 million metric tons. India also sends $2.34 billion (₹19,500 crore) worth of chemicals to the US annually. The US has imposed an additional 54% duty on organic chemicals.
The US share in New Delhi’s auto parts exports is only 3.5%. However, India sends auto parts worth ₹61,000 crore to the US every year. These tariffs will have a widespread impact on those exporting gearboxes and transmission parts to the US, which constitute 25% of India’s auto parts exports. India holds over a 40% share in the US gearbox and transmission parts market.
India sends about 35% of its pharmaceutical exports to the US. Many US companies rely on generic drugs manufactured by Indian companies. However, these are exempt from the tariffs, but traders are concerned about the situation changing.