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On July 30, Donald Trump announced a 25% tariff on India. Which came into force from 7 August. Additional 25% tariff has come into force from today. That is, now 50% tariff is applicable to India.
Today, 50% tariff has been implemented on goods sent from India to America i.e. from August 27. According to the Global Trade Research Initiative (GTRI) report, this new tariff can affect India’s export of about ₹ 5.4 lakh crore.
50% tariffs will make Indian products such as clothes sold in the US, James-Jewelry, Furniture, C Food expensive. This can reduce their demand by 70%.
Countries with low tariffs like China, Vietnam and Mexico will sell these goods at cheap prices. This will reduce Indian companies’ share in the US market.
Let us understand how much the 50% tariffs are implemented from today will have how much effect…
1. Machinery and Palpurje: Most impact on automotive parts
Earlier Status:
India exported engineering goods worth $ 19.16 billion (about 1.68 lakh crore rupees) in 2024. This includes steel products, machinery, automotive parts, electrical machinery, and other industrial equipment. The US was levying a 25% duty on cars, small trucks and their parts, while the fee on commercial vehicles was 10%.
After the tariff:
America is the largest market for Indian auto parts. About 32% of the total export of auto parts in FY25 went to the US.
The tariff hike may affect exports of ₹ 30,000 crore with an annual auto parts of $ 7 billion (about ₹ 61,000 crore).
At the same time, engineering goods small and medium enterprises will be the most affected which contribute 40% of engineering goods exports. This can put thousands of jobs in danger.
What can India do?
- The demand for engineering goods is increasing in Europe (Germany, UK) and Asean countries (Singapore, Malaysia). India can increase share in these markets.
- Reduce production costs by expanding the PLI scheme for engineering goods, so that companies are competitive in the US market.
2. Electronics: More impact on smartphone
Earlier Status:
India exported electronics worth $ 14 billion (about 1.23 lakh crore rupees) to the US in 2024. It has a large part of the smartphone, especially the iPhone. India is the largest supplier of the US iPhone. In April, when Donald Trump announced the tariff for the first time, average on electronics was a tariff of 0.41%.
44% of smartphones sold in America are made in India.
After the tariff:
The electronics is currently discounted. Until section 232 tariffs are announced, America will not have any effect on the export of smartphones like Apple, Samsung. Section 232 is part of the US Trade Extension Act 1962, which allows tariffs on imports on national security basis.
After a review of section 232, a final decision will be taken on the tariff. If a new tariff of 50% is applied after the announcement of section 232 tariff, then electronic goods exported from India will become expensive in the US. Companies can consider creating electronics items sent to America in America in India.
What can India do?
- To interact to maintain smartphones and semiconductors to maintain exemption from tariffs.
- Emphasis on strengthening the domestic market and developing new brands.
3. Pharma: 250% tariff threatens
Earlier Status:
In 2024, India exported drugs worth about 92 thousand crores to the US $ 10.52 billion, ie, about 92 thousand crore rupees. This is about 40% of the American Pharma Export. If it is applicable, then both America and India will be affected.
After the tariff:
Pharma is currently exempted, but Trump has threatened 150% in 18 months and 250% tariffs. The price of $ 100 medicine will double. This will harm big Indian companies like Sun Pharma, Dr. Reddy, Cipla, Lupin.
What can India do?
- Emphasis on trade deal with the US to keep the prices of generic drugs low.
- Increase exports in alternative markets like Europe and Latin America.
4. James & Jewelery: Export double before tariff
Earlier Status:
India exported gems and jewelery worth $ 9.94 billion (about 87 thousand crores) to the US in 2024. This is 44.5% of American diamond imports. Some jewelery already had a tariff of up to 25%.
Increased prices in the US may reduce exports by 15-20%.
After the tariff:
- The new tariff has increased to 50%. Exports are possible by 15-30% decrease due to increase in price. American buyers can move towards cheap options, which can put the jobs of Indian artisans in danger.
- At the same time, Indian companies can consider setting up manufacturing facilities in countries like Dubai and Mexico where tariffs are low. In Dubai, this fee is only 10% and 25% in Mexico, while India will now have to pay 50%.
What can India do?
- The Indo-US-America Bellator can insist on completing the trade agreement rapidly.
- Increase diamond exports in European markets.
5. Textile: Break on demand for clothes
Earlier Status:
In 2024, India had exported a textile of $ 10 billion to the US, ie about 87 thousand crores. This includes readymade garments to cotton yarn and carpet.
India’s total exports increased by 10% to $ 4 billion in the first quarter of this year, with exports to the US 14%.
Demand may decrease due to increase in the price of Indian clothing in the US.
After the tariff:
The new tariff may increase the price of 50% Indian clothing. Demand for companies is possible by 20–25%. The share of India’s textile exports in the US will decrease from 33% of the previous year to 20-25% this year.
What can India do?
- Now Indian textile companies will have to focus on other major export markets like European Union (EU), United Kingdom (UK) and United Arab Emirates (UAE), which is 45% of India’s total exports.
- India’s textile industry has suggested the government to remove import duty of 11% on raw cotton. The move may give a chance to bargain in business talks with the US.
6. C Food Sector: Business of ₹ 24,000 crore in danger
Before tariff: India currently exports a seafood worth ₹ 60,000 crore to the US annually. The total part of India in India’s total C Food Export is about 40%. About 2 crore Indians get employment from this sector.
After the tariff:
The 50% fee can put a turnover of ₹ 24,000 crore. Competitors of India, such as Ecuador (10%), Indonesia (19%), and Vietnam (20%) pay very low tariffs. Food products of these countries will be sold more due to Indian Sea Food being expensive. This may reduce the market share of Indian companies.
What can India do?
India will need to promote its sea food exports in China and European countries.
Now answers to two important questions related to tariffs:
Question 1: What is a tariff and why did Trump impose India?
answer: Tariff means import duty. When a country buys goods from another country, it imposes some tax on it, it is called tariff. Trump says that India charges a lot of tariffs on American goods, while the US imposes less tax on Indian goods.
Trump feels that this is unfair. Therefore, he had announced to impose 25% tariff on India under his ‘Recipe Drookal Tariff’ Policy i.e. Tit Ko Tit.
Trump also expressed displeasure over India buying oil and military equipment from Russia. For this reason, an additional tariff of 25% was also imposed. That is, a total of 50% tariff is imposed.
Question 2: What is the status of a trade deal between India and America?
answer: India and America have been working on a trade deal for a long time. On August 25, the US team was scheduled to visit the sixth round, but was later postponed.
Indian officials are expecting a big agreement by September or October, but some issues are still not agreed, such as the Agricultural Sector. India is not ready to open genetically modified crops and dairy markets to America.
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Read these reports related to tariffs
1. 50% American tariffs on India from tomorrow, notifications released: danger of jobs, government’s earnings will decrease; Learn how much effect
The US on Tuesday released an official notification to impose additional 25% tariffs on India. According to Indian time, this tariff will come into effect on Wednesday i.e. August 27 at 9:31 am. At present, about 10% tariffs were taken on Indian goods. Indian goods will become expensive in the US market due to new tariffs. Read full news
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