Decoding the US Tariff Exclusion List—What it means for Indian exporters
Live Events
Source: Authors' calculations based on trade data from WITS (UN COMTRADE) and technological category classification from UNCTAD
The Trump-era tariffs that took effect on April 2, 2025, were largely driven by the substantial trade deficit of the US, which reached $1.48 trillion in 2023. To regulate this massive merchandise trade imbalance, the White House issued Executive Order 14257 on April 2, 2025, introducing reciprocal tariffs on the US's trading partners. The Executive Order includes two Annexes, with Annex I outlining additional ad valorem tariffs imposed on trading partners based on the US trade deficit , including a 26% tariff on India. Alarmed by the move, India initiated bilateral talks with the US even before the April 9 announcement of the 90-day tariff suspension. This headline figure, however, only reveals a portion of the broader picture.Perhaps what has not received adequate attention is the contents of Annex II of the order that provides an exclusion list, which includes items that are completely exempted from the additional tariffs. The list identifies products, down to the 8-digit level of the Harmonized Tariff Schedule of the United States (HTSUS), that are exempt from the additional duties. An essential layer of nuance lies in the scope of these exemptions.Annex II specified 1,039 tariff lines under the exclusion list. Subsequently, the Presidential Memorandum announced on April 11, 2025, further expanded these carve-outs to include a wide range of high-tech goods, including semiconductors, smartphones, automatic data processing machines, transistors, and integrated circuits. Of the entire exclusion list, the top products included organic chemicals, accounting for 26.0%, followed by wood products at 14.1%, inorganic chemicals at 9.9%, copper at 7.6%, mineral fuels at 6.6%, electrical machinery at 5.6%, and pharmaceuticals at 5.3%.India's exports of items on the exclusion list accounted for 29.1% of its total exports to the US, offering a reprieve from the new tariffs and highlighting significant export opportunities. Among India's top exports to the US were gems and jewellery at 13.4%, electrical machinery at 13%, pharmaceuticals at 10%, and mineral fuels at 8.6%—together comprising a substantial share of the overall trade. A number of these items will benefit from exemption under the newly implemented tariffs. Smartphones, one of India's top exports to the US, have been spared, and nearly half of India's electrical item exports by value now escape the tariff dragnet. For the Indian pharma sector , 99.7% of its export value has been exempted. Also, Indian exports of mineral fuels are completely immune to the additional duties. The exclusion list, however, does not offer any relief to India's largest export item to the US—gem and jewellery, which will remain largely exposed to the brunt of the new tariffs.An interesting insight emerges when items in the exclusion list are classified by the level of skill and technology into four main groups: primary and agro-based manufactures, resource-based manufactures, low-technology manufactures, and medium- and high-technology manufactures. Almost 75% of the exclusion list belongs to medium- and high-tech manufactures, and resource-based manufactures (comprising largely of metals, mineral products, and organic chemicals), thus protecting India's exports worth almost $21.5 billion.This is not surprising, given that India's exports to the US have undergone structural changes in the past few years. In 2010, low-technology manufactures accounted for 36% of India's exports, forming the largest chunk. However, by 2023, the share of these items in India's exports fell to 26%. On the other hand, medium- and high-technology manufactures accounted for 31% of India's exports in 2010 but increased to 42% in 2023. Low-technology products have, in fact, drawn the highest tariffs at 29% and remain the most exposed under the new tariff regime.While the US exclusion list has helped buffer a significant portion of India's exports from the tariff shock, the volatility surrounding the new Trump-era trade policy raises concerns. With the administration's unpredictable stance, the reintroduction of currently exempt items into the tariff net remains a real possibility.Nisha Taneja is professor at the Indian Council for Research on International Economic Relations (ICRIER); Nirlipta Rath and Vasudha Upreti are Research Assistants at ICRIER. Views are personal.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hindustan Times
39 minutes ago
- Hindustan Times
Trump signs order to double steel, aluminium import tariffs to 50%
New Delhi: A 50% tariff on steel and aluminium imports into the United States went into effect on Wednesday, doubling the previous rate as President Donald Trump cited national security concerns for the dramatic escalation in trade protections. The new tariff rates, increased from an earlier 25% rate, were announced by Trump in a statement on Tuesday. The president claimed legal authority to impose the tariffs through Section 232 of the Trade Expansion Act of 1962, which allows the president to address national security risks arising from imports. 'In my judgement, the increased tariffs will more effectively counter foreign countries that continue to offload low-priced, excess steel and aluminium in the United States market and thereby undercut the competitiveness of the United States steel and aluminium industries,' read Trump's statement released by the White House. Trump said the earlier 25% tariff rates, first announced in February and implemented on March 12, had helped America's steel industry but had not enabled companies to maintain the capacity needed to meet national defence needs. 'I have determined that increasing the previously imposed tariffs will provide greater support to these industries and reduce or eliminate the national security threat posed by imports of steel and aluminium articles and their derivative articles,' Trump said. The tariff increase comes amid broader trade disputes at the World Trade Organisation. Several countries, including India, have formally challenged the US measures, characterising them as 'safeguard measures' that violate WTO rules and threaten retaliatory action. In May, India formally notified the WTO that it viewed America's tariffs on steel and aluminium as safeguard measures and indicated it could suspend 'concessions and other obligations' given to the US and that it retains the right to enforce retaliatory measures. On May 22, America rejected India's characterisation of the tariffs as safeguard measures and refused to engage in talks on the matter. The introduction of tariffs has proven controversial within the US. The America Iron and Steel Institute, an industry group, has welcomed the increased tariffs as a necessary measure to protect domestic producers from cheaper foreign competition. However, manufacturers using steel as input for production have publicly raised concerns that more expensive steel will impact competitiveness across other domestic industries. For India specifically, the consequences are direct and substantial. According to the Global Trade Research Institute (GTRI), a New Delhi-based research group, India exported $4.56 billion worth of iron, steel, and aluminium products to the US in FY2025, with key categories including $587.5 million in iron and steel, $3.1 billion in articles of iron or steel, and $860 million in aluminium and related articles. 'These exports are now exposed to sharply higher US tariffs, threatening the profitability of Indian producers and exporters,' the GTRI said in a brief.
Time of India
40 minutes ago
- Time of India
After US, Amul launches milk in Spain, EU
Vadodara: After making waves in the United States, home-grown dairy giant Amul has now stepped into Europe, launching its fresh milk products in Spain and the European Union (EU). The Gujarat Co-operative Milk Marketing Federation Limited (Amul Fed) announced a strategic partnership with Spain's premier dairy cooperative, Cooperativa Ganadera del Valle de los Pedroches (COVAP), to bring Amul milk to European shelves. The official launch ceremony was held at the Indian Embassy in Madrid and was attended by dignitaries including Dinesh K Patnaik, India's ambassador to Spain; D Fernando Heredia Noguera, deputy director for International Relations and Community Affairs at the Spanish Ministry of Agriculture, Fisheries and Food; Ricardo Delgado Vizcaíno, president of COVAP and senior executives from Amul. Initially, Amul milk will be available in Madrid and Barcelona, with plans to expand soon to Malaga, Valencia, Alicante, Seville, Córdoba, and even Lisbon in neighbouring Portugal. Looking ahead, Amul aims to spread its presence to Germany, Italy, Switzerland, and beyond. Jayen Mehta, managing director of GCMMF, expressed pride in the collaboration: "Partnering with COVAP, a respected Spanish dairy cooperative, allows us to nourish Spanish consumers with the goodness of Amul milk. This is the first time Amul fresh milk is being launched in Europe and it aligns with Prime Minister Narendra Modi's vision to make Amul a truly global dairy brand." Marking the United Nations' International Year of Cooperatives in 2025, Mehta added, "We are confident that Amul will connect with Indians worldwide and showcase the power of cooperation between dairy cooperatives." Ricardo Delgado Vizcaíno highlighted the mutual benefits: "This partnership helps both COVAP's farmer-members and Indian dairy farmers grow their brands, combining COVAP's technology and high-quality milk with Amul's renowned global reputation." Founded in 1959 in Córdoba, COVAP is a key player in Andalusia's agri-food sector with over 2,000 farmer-members. Its state-of-the-art dairy plant processes more than 400 million litres of milk annually and exports to over 30 countries, including the US, UK, and Asia. Amul, the world's largest farmer-owned dairy cooperative, processes over 12 billion litres of milk annually. With a brand turnover exceeding $11 billion, Amul ranks as the eighth-largest milk processor globally, operating 112 dairy plants across India and handling 42 million litres of milk per day.
India.com
40 minutes ago
- India.com
India Eyes Deadliest Missile Yet: Meet R-37M That Can Obliterate Pakistan's AWACS, F-16s Before They Even Fire
New Delhi: In the escalating arms race post-Operation Sindoor, India may be acquiring a game-changing weapon that could rewrite South Asia's air warfare equation. It is Russian R-37M missile, a long-range air-to-air beast so fast and deadly that even the United States and China are known to shudder at its capabilities. Russia is said to have offered India to supply the R-37M and license its production on Indian soil. If the deal goes through, the Indian Air Force (IAF) will gain a powerful edge over adversaries such as China and Pakistan in high-stakes aerial confrontations. The R-37M is considered to be a nightmare for Pakistan's F-16s and AWACS. It is not only a missile but also a jet killer. Built to destroy enemy aircraft from beyond visual range (BVR), it can take down Pakistan's prized F-16s and AWACS surveillance aircraft before they even detect an Indian fighter jet. With speeds of up to Mach 6, six times the speed of sound, the R-37M can strike targets more than 300 kilometers away. Its mid-flight target switch capability and active radar guidance system make it almost impossible to dodge, even for highly maneuverable jets. 'It's not a missile but an airborne predator. It allows India to destroy enemy aircraft without ever entering their strike zone. That flips the entire doctrine of air combat,' said a senior defense analyst. At present, the IAF deploys R-77 missiles on its Su-30MKI jets. But the R-37M could replace the R-77 entirely, offering a dramatic leap in range, speed and precision. Designed originally to target U.S. AWACS and refueling aircraft, the R-37M's induction into India's arsenal would render Pakistan's air surveillance systems deeply vulnerable. Russia is reportedly willing to share production technology, allowing India to manufacture the missile domestically – a huge win for India's 'Make in India' defense ambitions. Built for the kill, let's know the R-37M by the numbers: speed – Up to Mach 6 (7,400 km/h); range – estimated 300-400 km; weight – 510 kg, length – over four metres; warhead – 60 kg high-explosive; designation – NATO calls it the AA-13 Axehead; and targets – fighter jets, AWACS, drones and tanker aircraft. Unlike older systems, the R-37M does not need visual confirmation. It can lock onto targets far outside the enemy's radar or weapon range, hitting them from the safety of stand-off distances. For Indian pilots, this means striking first from far and never being seen. R-37M Can Strike Across LoC The Pakistan Air Force (PAF) is heavily reliant on U.S.-made F-16s, which are considered its crown jewel. But defense experts warn that with the R-37M in play, India could shoot them down from across the Line of Control (LoC) before they even know what hit them. 'The R-37M neutralises Pakistan's aerial advantage. If deployed, this missile makes any cross-border intrusion suicidal for enemy jets,' said a retired Air Marshal. As India's defense modernisation accelerates in the wake geopolitical tensions simmer, the R-37M could soon be a centerpiece of the country's air dominance strategy – one that might keep adversaries awake at night.
