Editor’s Note
The upcoming U.S. tariff adjustments, effective April 2025, are set to disproportionately impact key Indian export sectors. As detailed below, industries from pharmaceuticals to automobiles face significant new tariff gaps, potentially reshaping trade dynamics and competitiveness.
Indian industries that rely heavily on US exports for commodities—including seafood, dairy, wine, diamonds, electronics, and chemicals—are expected to face the most significant disruptions. With the latest tariff norms coming into effect April 5, 2025, Indian sectors like pharmaceuticals and chemicals face an 8.6 percent tariff gap, plastics 5.6 percent, textiles 1.4 percent, jewelry 13.3 percent, and automobiles 23.1 percent. This discrepancy places Indian exporters at a disadvantage, increasing costs and reducing competitiveness in the US market.
The US announced sweeping tariff hikes on April 2, 2025, under Trump’s new trade policy, directly impacting India’s exports to its largest trading partner. On April 9, 2025, Trump announced a 90-day pause on implementing higher, country-specific reciprocal tariffs, temporarily easing pressure on several countries, including India.
On May 28, 2025, a US Federal Court declared the Trump administration’s broad tariffs on imports from nearly all foreign countries unlawful. However, the following day, a US Appeals Court stayed that decision, allowing the Trump administration to continue enforcing the tariffs during the appeal process.
On April 3, 2025 (IST, 1:30 AM), the US announced reciprocal tariffs on over 180 countries, including a 10 percent universal tariff on all imports, effective April 5, 2025. The US administration, however, has exempted pharmaceuticals from these tariffs.
Subsequently, on April 9, 2025, Trump announced a 90-day suspension on the imposition of higher, country-specific reciprocal tariffs, providing temporary relief to several countries, including India. While India has been granted a temporary exemption from the additional 26 percent tariff, a baseline 10 percent duty on Indian exports remains in force.
The tariffs had been legally contested by several small businesses and several US states, arguing they disrupted the global trade order. India has accelerated its efforts to secure a favorable trade deal with the US before the end of the 90 days suspension window.
On May 29, 2025, the US Court of Appeals for the Federal Circuit granted a temporary stay that allows the Trump administration to reimpose tariffs that had been halted just a day earlier by the US Court of International Trade. The latest stay follows the administration’s appeal challenging the lower court’s ruling, which found that Trump had exceeded his authority under the International Emergency Economic Powers Act (IEEPA) by introducing sweeping tariffs on imports from nearly all trade partners.
These reinstated duties include a baseline 10 percent tariff on imports from all countries, as well as additional country-specific tariffs, such as the 26 percent duty imposed on Indian goods. The appellate court’s decision means that the US administration can continue collecting these tariffs while the appeal is pending. Plaintiffs have until June 5 to respond, with the administration’s counter-response due by June 9, 2025. Trump has signaled he may escalate the matter to the US Supreme Court if necessary.
The reinstatement of the tariffs is expected to impact India’s approach to the ongoing bilateral trade agreement (BTA) negotiations with the US. Trade experts in the country note that Indian negotiators are likely to reassess their strategy in light of the legal instability surrounding the Trump tariffs.
Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), has highlighted that with the Trump tariffs standing on shaky legal ground, India must pause and reassess its negotiation strategy before committing to an FTA that could disproportionately favor US interests.
As per media reports, Indian trade officials are closely reviewing the implications of the US court ruling and may adjust their negotiation stance accordingly. India and the US have held several rounds of talks since the BTA was announced during Indian Prime Minister Narendra Modi’s visit to Washington in February 2025.
A high-level US delegation is expected to come to New Delhi on June 5 to 6 to continue the discussions. In May 2025, the Union Minister of Commerce and Industry Piyush Goyal led an Indian team to Washington for prior rounds of talks.
India has reportedly been under pressure to finalize the agreement before July 8, when the current 90-day suspension on the additional 26 percent tariff is set to expire. According to media reports, the US has pushed for massive concessions from India, including tariff reductions on thousands of products such as automobiles and agricultural goods, opening up India’s government procurement market, easing intellectual property and data laws, and allowing broader foreign market access.