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Trump slaps 25% tariff on Indian goods: Smartphones, pharma, shrimp hit
US President Donald Trump has announced a sweeping 25 per cent tariff on all Indian goods exports to the United States, effective August 1. The move targets India's non-monetary trade barriers and its ties with Russia, including energy and defence cooperation.
The decision threatens to disrupt nearly $129 billion in annual bilateral trade and hit critical Indian export sectors ranging from smartphones and pharmaceuticals to shrimp and auto parts.
What's the latest
The tariff order was posted by Trump on Truth Social on July 30, just days after the fifth round of trade talks concluded in Washington. He hinted at additional penalties related to India's purchases of Russian defence and energy supplies.
The sixth round of negotiations is scheduled for late August 2025, with a US delegation visiting New Delhi starting August 25.
Numbers game
Total India-US bilateral trade in 2024: $129 billion
Indian smartphone exports to US in FY25: $24.1 billion (up 55 per cent YoY)
Pharma exports to US: $8.7–10.9 billion (approx 31–35 per cent of India's total)
Apparel exports to US: $10.8 billion (28.5 per cent of India's textiles exports)
Marine exports (total): $7.2 billion | US share: approx $2.4 billion
Auto component exports to US: $2.2 billion
How Indian smartphone exports are vulnerable
While IT and IT-enabled services aren't directly affected, hardware products like smartphones, electronics, and components are within the tariff net. India's PLI-enabled smartphone exports to the US saw a record surge, overtaking petroleum and diamonds in FY25. Apple's iPhones — now increasingly assembled in India for US markets — may see price hikes or supply delays if they fall under the new tariff slab. India has recently overtaken China to become the largest exporter of iPhones to the United States in the second quarter of 2025, marking a pivotal shift in global supply chains. This transformation is directly powered by Apple's strategic move to expand iPhone manufacturing in India as part of its 'China Plus One' strategy amid increasing US–China trade tensions and rising tariffs on Chinese goods
A 25 per cent tariff could severely dent that growth, undermining momentum in India's fast-growing tech manufacturing exports.
Pharmaceutical sector faces pricing shock
India exported over $10 billion in generic drugs and APIs to the US in FY25. If pharma products aren't exempted — as they were in certain EU trade deals — the new tariffs could worsen drug shortages and raise prices in the US healthcare system.
US dependence on Indian generics makes this a high-stakes category for both economies.
Textiles and apparel under pressure
With $10.8 billion in apparel exports to the US in 2024, India is highly dependent on the American market. A 25 per cent tariff, on top of the existing 10–12 per cent rates, would make Indian garments less competitive.
US buyers may shift sourcing to Vietnam or Bangladesh, jeopardising order volumes and jobs in India's labour-intensive textile sector.
Jewellery exports face margin compression
India exported around $12 billion in gems and jewellery in FY25 — with the US accounting for about 30 per cent of that. Since tariffs are already at 27 per cent, the additional 25 per cent surcharge would drastically narrow profit margins and may trigger order cancellations or supplier switching.
Auto parts and engineering goods in the firing line
India exported $2.2 billion worth of auto parts and components to the US in 2024. Finished vehicle exports remain marginal at $10 million, but parts shipments will now face the full 25 per cent tariff.
This may impact India's engineering goods sector, a key driver of manufacturing and Make in India-linked exports.
Shrimp and seafood exports take a hit
The US is India's largest buyer of shrimp, importing nearly one-third of India's total $7.2 billion marine exports. The tariff move may reduce price competitiveness against Latin American suppliers.
This comes after the US criticised India's high MFN tariffs on agricultural goods — cited frequently by the Trump administration as a trade irritant.
The bottom line
Trump's blanket 25 per cent tariff on Indian goods exports escalates trade tensions at a sensitive time. While some sectors may push for exemptions, the broad sweep of the policy threatens India's export stability — particularly in electronics, pharma, shrimp, and apparel — ahead of critical bilateral trade negotiations in August.
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