US Tariff on India: Impact, Affected Products, Rates & India’s Response

On August 27, 2025, Donald Trump increased tariffs on many Indian goods by 25%, bringing the total tariffs up to 50%. This move has raised concerns about its impact on India’s economy and the stock market.

In this article, we will discuss about Trump’s Additional tariffs, Tariff Implementation dates, the List of percentage increases on products, and economic impacts and market reaction to the tariff announcement.

Key Highlights:

• Tariff Rates: US imposes 50% total tariffs on India from August 27, 2025.
• Affected Sectors: Textiles, gems, jewelry, leather, marine, chemicals; 55% of $87B exports at risk.
• Exempted Sectors: Pharma, semiconductors, energy, critical minerals exempt, preserving supply chain roles.
• Economic Impact: Tariffs may cut GDP by 0.3-0.5%, $4-5B export drop, rupee risks.
• India’s Response: India condemns tariffs, seeks diplomacy, diversification, MSME support, no retaliation.

Trump’s Additional Tariffs on Indian Imports

The US President Donald Trump announced the additional tariffs will be implemented on Indian goods from 27th August 2025, on 6 August 2025 which are getting imported in US. This follows an earlier 25% duty implemented on August 1, 2025, targeting India’s continued purchase of Russian oil amid geopolitical friction over the Russia-Ukraine war (conflict). 

The tariffs were the highest the US charged on any of its other trading partner. This high tariffs has caused a lot of worry in India because it puts their $87 billion worth of exports to the US at risk and is making the relationship between the two countries tense.

Overview of US-India Trade Relations

The US and India share a robust trade relationship, with bilateral trade reaching $190 billion in 2024. India’s top 3 exports to the US include 

• Pharmaceuticals ($8.1 billion)
• Telecom instruments ($6.5 billion)
• Precious stones ($5.3 billion)

while the US runs a $45.7 billion trade deficit with India.

Historically, trade negotiations have aimed to address this imbalance, with India reducing tariffs on US goods like bourbon whiskey and motorcycles.

The recent tariffs are justified under section 232 (national security) and section 301 (unfair trade practices) of US trade laws, and they also reflect geopolitical motives that were tied to India’s Russian oil purchases and BRICS membership.

US Tariff Implementation Dates on Indian Goods (2025)

The 50% Tariff Structure on Indian Goods

The tariff structure on Indian goods combines a baseline 10% duty with a 25% reciprocal tariff, which was announced by Trump on April 2, 2025, and an additional 25% tariff effective from August 27, 2025. Unlike China, which faces a 30% tariff, or Vietnam and the Philippines at 20%, India and Brazil face the highest rate of 50%. 

There are some exemptions that apply to pharmaceuticals, semiconductors, energy resources (crude oil, natural gas), and critical minerals, sparing key sectors like India’s generic drug exports, which account for 50% of the US market. 

Because of this tariff, the sectors like textiles, gems and jewellery, leather, marine products, chemicals, and auto components face significant exposure, with 55% of India’s US-bound exports at risk.

List of Indian Products Impacted by US Tariff Rates 

Economic Impact of Tariffs on India

The tariffs threaten India’s $434 billion export engine, with $87 billion directed to the US, equivalent to 2.5% of India’s GDP. Industry estimates suggest a $4–5 billion drop in engineering exports alone, while overall GDP growth could decline by 0.2–0.5%, with forecasts revised from 6.5% to as low as 6%. 

The sectors like Small and medium enterprises (MSMEs), which dominate textiles and leather, face reduced competitiveness against rivals in Vietnam and Bangladesh, where tariffs are lower. 

The Indian rupee has weakened in offshore markets, raising concerns about imported inflation and increased borrowing costs for foreign debt-laden companies.

Stock Market Reaction to Tariff Announcement

Indian stock markets reacted positively on the day, with the Sensex and Nifty gaining on August 7, 2025, as the additional 25% tariff was announced. Sectors like gems and jewellery, automobiles, and textiles saw significant pressure, while IT services, FMCG, and banking remained relatively insulated due to limited US exposure.

The Nifty Pharma index, however, rose 2.73% due to tariff exemptions for pharmaceuticals. Foreign institutional investor (FII) flows have turned volatile, with currency depreciation exacerbating capital flight risks.

India’s Strategic Response to the US Tariff

India’s Ministry of External Affairs condemned the tariffs as “unfair, unjustified, and unreasonable,” emphasising the country’s sovereign right to make energy decisions. Rather than immediate retaliation, India is pursuing a multi-pronged strategy.

• Diplomatic Engagement: Government remains committed to a fair bilateral trade agreement, with a fall 2025 deadline for negotiations.
• Sectoral Support: Commerce Minister Piyush Goyal has ruled out direct subsidies but proposed measures like interest subsidies, loan guarantees, and reduced certification fees for MSMEs.
• Market Diversification: Industry leaders like Anand Mahindra advocate exploring new markets to reduce US dependence.
• Domestic Resilience: PM Narendra Modi has promoted local products to cushion global demand shocks.

India has also highlighted Western double standards, noting that the US and EU continue trading with Russia while pressuring India.

US Pressure on India Amid Geopolitical Tensions

The tariffs aren’t just about money also about politics. The US is unhappy with India because India buys a lot of oil from Russia and is part of a group called BRICS, which the US sees as a challenge to its power. Even though China buys more Russian oil, the US gave China lower tariffs, probably because the US is still negotiating trade deals with them.

This is different from the friendly relationship Trump showed when he met India’s Prime Minister Modi in early 2025. Experts say these tariffs are like “economic blackmail” to try to force India to give in to US demands.

Tariff Delay for Negotiations 

The US waiting 21 days before adding the extra 25% tariff gives both countries a chance to talk and try to make a deal. If they agree, the tariffs might be lowered to about 15–20%. But some tough topics, like farming and dairy, are hard to solve. India needs to protect its farmers and small businesses while also making trade deals.

These tariffs also show that the World Trade Organisation (WTO) can’t always solve problems quickly, and India might fight back with its own tariffs. In the long run, India might work harder to rely on itself and sell its products to more countries so it doesn’t get stuck in this situation again.

Conclusion

The US’s 50% tariff hurts India’s export industries and economy, especially textiles, gems, and small businesses. India is responding carefully with diplomacy, industry support, and exploring new markets. It must stay strong and smart to protect its interests in a changing global landscape.

Also Read: Reciprocal Tariffs 2025: Impact on India’s US Export Trade