More than half of India's exports to US face Trump's 25% reciprocal tariff

Indian Express

4 hours ago

With the US' reciprocal tariff of 25 per cent on India having come into effect from August 7, the Indian finance ministry has estimated that more than half of the country's merchandise exports to the US are subject to the same.
'It is estimated that around 55% of total value of India's merchandise exports to the US will be subject to this reciprocal tariff,' Minister of State for Finance Pankaj Chaudhary told the Lok Sabha on Monday. In 2024, India's merchandise exports to the US totalled $87.3 billion, resulting in a trade surplus of $45.8 billion.
'It may be noted that reciprocal tariffs at varying rates have been imposed by the US on imports from all countries. Combination of different factors such as product differentiation, demand, quality, contractual arrangements would determine the impact on India's exports,' Chaudhary added in his reply to a question asking if the government had made any assessment on the impact of the US' reciprocal tariff threat on Indian goods.
In a post on social media platform Truth Social on July 30, US President Donald Trump announced a 25 per cent tariff on Indian goods, with an additional but unspecified 'penalty' for importing energy and defence items from Russia. On August 6, the penalty was clarified to be an additional 25 per cent tariff that will be effective from August 27. As such, from that date, the tariff on Indian goods entering the US will be 50 per cent.
Chaudhary's reply to the Lok Sabha question on Monday made no mention of the impact of the 25 per cent penalty or what proportion of India's exports would be subject to it.
'The Department of Commerce is engaged with all stakeholders including exporters and industry for taking feedback of their assessment of the situation. The Government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs, exporters, MSMEs etc. and will take all necessary steps to secure our national interest,' the minister further said.
Certain items from various nations are exempt from the US' tariffs until the so-called investigations under Section 232 of the Trade Expansion Act of 1962 are completed. These investigations look into the effect of various imports on US national security. Currently, the US' Bureau of Industry and Security has nine active Section 232 investigations, including for pharmaceuticals and pharmaceutical ingredients. The pharma investigation is particularly crucial from an Indian point of view, with the US accounting for about a third of India's pharma exports of $30 billion in 2024-25.
Economists have warned that the US' cumulative 50 per cent tariff could hurt India's growth. In an interview to The Indian Express, Tanvee Gupta Jain, UBS' Chief India Economist, said the 50 per cent tariff has put at risk $30 billion-$35 billion worth of New Delhi's exports to the US. This, Jain said, could lead to GDP growth being lower by almost a full percentage point over
Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy.
... Read More