President Donald Trump’s 50 per cent tariff on India will impact $65 billion worth of merchandise exports to the United States, according to a senior government official statement.
“Some hand-holding will be required for certain labour-intensive exports that would be done by some measures like easing bank credit,” the official said, adding that the initial tariff of 25 percent could have been absorbed by exporters to an extent, but the situation has changed with the duties doubling.
As per a rough forecast conducted by the central government, sectors like textiles, gems and jewellery and marine products are expected to be hit more than others, this official told Moneycontrol.
India exported goods worth $86.51 billion to the US in FY25. “There are also second and third round effects of tariffs. There are some goods that are exempted from these tariffs as of now, but then the impact on some labour-intensive sectors will be much more offsetting some of the advantages from exemptions,” the official added.
Indian goods worth around $30 billion to the US, covering pharmaceuticals, certain electronic products such as smartphones, and energy, are so far secure from steeper duties given that they are under an exemption list. These products face either lower or zero tariffs.
The Finance Ministry had not responded to an e-mail seeking comments by the time this article was published. To be sure, the impact on Indian exports could be lower if New Delhi and Washington agree to a deal, potentially reducing the tariff rate on India, this official added.
Trump signed an executive order on August 6, accusing India of colluding with Russia, increasing the effective tariff rate on the country to 50 percent, up from 25 percent from the previous order issued on July 31. While, the 25 percent duty on most Indian exports kicked in on August 7, the steeper 50 percent tariff is set to come into effect from August 27.
India and the US are presently negotiating a Bilateral Trade Agreement, the last round of talks for which was held in July, the commerce ministry told Lok Sabha on August 12. On August 11, the finance ministry said that around 55 percent of Indian exports to the US will be subject to 25 percent reciprocal duties by the US. The ministry did not elaborate on the impact of the additional 25 percent duty levied on India.
