The recent escalation of tariffs by the United States against Indian exports has significantly altered the landscape of India-US trade relations. Announced by US President Donald Trump on July 31st and August 6th, 2025, the measures impose a 25% tariff plus a 25% penalty tariffs respectively on exports from countries importing Russian oil (in the form of secondary sanctions). The Ministry of External Affairs, released an official statement and called these actions unfair, unjustified and unreasonable, pointing to ongoing imports of Russian gas and crude by Europe, and uranium, palladium, and fertilizers by US. India’s purchase of Russian oil remains fully compliant with international norms and is guided by cost competitiveness and energy security imperatives.
Our analysis shows that USD 60.85 billion around 70% of India’s goods exports to the US is now exposed to the 50% tariff. While this represents just 1.56% of GDP and 7.38% of total exports, far from a catastrophe for a USD 3.9 trillion economy, the impact is heavily concentrated in labour-intensive and high-value sectors such as textiles and apparel, gems and jewellery, auto parts and agricultural products, notably shrimp. These sectors not only anchor the merchandise exports to US but also directly affect employment generation and the livelihoods of millions of workers and farmers. The T&A sector, faces a tariff disadvantage of over 30 percentage points compared with competitors like Bangladesh, Pakistan and Vietnam, threatening its competitive position in a key export market. Gems and jewellery exports, worth USD 11.9 billion, face similar challenge against suppliers such as Turkey, Vietnam, and Thailand. Auto parts, which constitute 3% of India’s exports to the US, are also vulnerable. In agriculture, shrimp exports will be worst hit with 50% tariffs higher than those applied to competitors like Ecuador, Indonesia, and Vietnam, in addition to existing anti-dumping (1.8-3.0%) and countervailing duties (5.7%) India faces. These are sectors where buyers can switch sourcing relatively quickly, which gives US importers bargaining power and weakens India’s negotiating position.
The policy brief recommends a three-pronged strategic response. Firstly, smart negotiations with logic and rationality. Secondly, announce immediate and targeted relief support to hard-hit sectors, and last on high priority, diversify our export markets. The success of our leaders will be ensuring that short-term disruptions give way to long-term gains, reinforcing India’s position as a trusted and indispensable player in the global economy.
