Trump slaps 25% tariff on all Indian goods; exports worth $85 billion at risk

Time of India

9 hours ago

The United States has levied high tariffs on India, potentially affecting a significant portion of Indian exports. This move places India among the most heavily penalized nations under the new tariff regime. Ongoing trade negotiations between India and the US aim to address these concerns. The Indian government downplays the impact, emphasizing its commitment to protecting national interests.
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The US has imposed an across-the-board 25% tariff on all Indian-origin goods, effective August 7, along with penal duties on scores of other countries. The duties range from 10% to 41%. India 's competitors, including Pakistan, Vietnam, Bangladesh and Turkey, were levied lower tariffs of 15-20%. The steep duty could hurt nearly half of India's exports of more than $85 billion to the US. This measure, part of a new executive order issued by US President Donald Trump on July 31, places India among the most harshly treated countries in the new tariff regime, of fering no product-level exemptions even for sectors deemed critical, such as pharmaceuticals, energy and electronics.Crucially, the order mentions that tariffs may be reduced once countries do a deal with the US. India and the US are currently in negotiations over a trade accord. Indian government officials played down the measure's impact and added that New Delhiwill not be pressured into giving any duty exemptions on agricultural, dairy and genetically modified (GM) products in trade pacts.'The impact (of the tariff) will not be very big. More than half of India's exports to the US are expected to remain unimpacted. Due to the Section 232 exemption of the US, exports worth about $40 billion would be impacted with these tariffs,' said an official.Trump has been intensifying his rhetoric against India in the past few days. New Delhi, though, has said it will take all necessary steps to safeguard its national interest, besides pointing out that the country's economy—the fastest-growing major one —was a bright spot amid global uncertainty.Most Indian goods , such as pharma and electronic goods, are already in the exemption category of the US and would not attract any duty, he added.Officials said the tariffs will not have any adverse effect on the economy and India will not come under pressure. 'The GDP loss likely to be less than 0.2% in the worst case scenario. Exports may fall slightly, but most of the goods exported to the US will not be subject to tariffs,' said the official.'India is giving top priority to its interests, There will be no compromise on agriculture, dairy, GM crops… (considering) religious sentiments. There will be no compromise on non-veg milk and beef,' said another official. 'No adverse effect will be allowed on the interests of Indian farmers.' Commerce and industry minister Piyush Goyal will meet exporters from textiles, engineering, pharmaceuticals, steel, IT and chemicals, from August 2-3 in Mumbai to discuss the implications of the 25% tariff. Similar stakeholder consultations would be held in New Delhi the next week.Exporters have been seeking immediate rollout of Interest Equalisation Scheme for pre- and postshipment export credit, and market support for goods meant for the US. The government should absorb some of the cost disabilities due to the tariffs, said the Federation of Indian Export Organisations (FIEO).'We expect $45-47 billion of exports to get impacted by this move,' said Ajay Sahai, director general of FIEO. The US was India's largest export destination in FY25, with shipments valued at $87 billion, accounting for about a fifth of the $437 billion total.India and the US have been negotiating a bilateral trade agreement (BTA) since March and aim to conclude the first tranche of talks by October. The US has been pressuring India to allow farm, dairy and GM imports as part of the pact. So far, five rounds of talks have been completed. The sixth round of talks will be held from August 25.The official cited earlier insisted that animal feed is used in the dairy sector in the US, and that New Delhi has never given any duty concessions in any of its earlier trade pacts on its imports. 'There are religious sentiments… so it is not acceptable,' the person said. 'There will be no compromise on these segments in any of India's trade pacts.'Another official said that certain segments, such as gems and jewellery, will not be impacted much as these are region-specific. 'If American consumers buy jewellery which is made in Rajasthan, then that demand would not get impacted much,' the official added.Exporters said that the new order puts India at a disadvantage relative to some of its rivals that face lower tariffs. Trump has also threatened an unspecified penalty levy to be imposed on India for doing business with Russia. 'The implications of the recent development are being examined. The ministry of commerce and industry is engaged with all stakeholders, including exporters and industry for taking feedback of their assessment of the situation,' commerce and industry minister Piyush Goyal said in his statement in Parliament on Thursday.As per the order, countries have been subject to tariffs ranging from 10% to over 41% with differential rates based on geopolitical risk, economic alignment, and trade volume. 'Many trading partners have been constructive, bold, and visionary in their commitment to this fundamental change initiated by the President,' US Trade Representative Jamieson Greer said on the executive order. 'This new trading system will lower the US trade deficit and lead to better outcomes for American workers, their families, and their communities. In the coming weeks, this new system will begin to take shape, as the Trump administration works with trading partners on a common path to shared prosperity.'The EU has been granted a special concession. If the existing US most favoured nation tariff on an EU product is below 15%, total tariff will rise to 15%. However, if the MFN tariff is already 15% or higher, no additional duty will be charged. Those that have been hit by the highest Trump tariffs are Iraq and Serbia (35%), Switzerland (39%), Laos and Myanmar (40%), and Syria (41%).