Trump’s 25% Tariffs on Indian Goods: Sector-Wise Impact, Trade Data, and What Lies Ahead

On July 30, 2025, U.S. President Donald Trump announced a 25% import tariff on all Indian goods starting August 1. The move is not limited to a few items; it is a blanket tariff on nearly $87 billion worth of Indian exports to the U.S. (2024 figures). This has triggered immediate concerns across India’s export-heavy sectors.

Let’s break this down through an analytical lens:

Why Did the U.S. Impose These Tariffs?

1. High Indian Tariffs on U.S. Products

• India’s average tariff on agricultural imports is nearly 39%
• Trump has long claimed that the U.S. is not getting a fair deal, calling India the “tariff king.”
• He aims to use these tariffs to pressure India into opening its markets

2. India’s Trade With Russia

• India continues to buy Russian oil and military hardware despite Western sanctions
• In 2024, Russia accounted for over 30% of India’s crude oil imports
• The new U.S. tariff has been positioned as a penalty for not aligning fully with Western sanctions on Russia

Trade Snapshot: Sector-Wise Impact:

India’s Exports to the United States were around $87 billion during 2024. The U.S. is India’s largest export market. Roughly 17.90% of India’s total goods exports go to the U.S., so even a 5–10% drop could translate to billions in lost revenue. Here’s how key Indian export sectors stack up in terms of exposure and potential tariff impact:

1. Textiles & Apparel

• Exports to U.S.: ~$5.1 billion
• U.S. share: Nearly 25% of India’s textile and apparel exports
• U.S. retailers may shift sourcing to Bangladesh or Vietnam
• India’s textile industry employs over 45 million people; any export dip could lead to job losses

2. Gems & Jewelry

• Exports to U.S.: ~$9.1 billion
• Key items: Cut diamonds, gold jewelry, silver articles
• U.S. share: Around 28–30% of India’s total jewelry exports
• Higher prices may lead to reduced or delayed orders from U.S. buyers
• The sector is already facing stress due to the global slowdown and gold price volatility

3. Engineering Goods (Machinery, Auto Parts

• Exports to U.S.: ~$6.5 billion
• U.S. buyers may shift to Mexico, China, or domestic sources
• Could impact the momentum of Make-in-India and PLI-driven engineering exports
• Small and mid-sized exporters could face significant order losses

4. Electronics & Electrical Equipment

• Exports to U.S.: ~$12.3 billion
• Key items: Mobile phones, telecom gear, circuit boards
• Tariffs will reduce India’s cost advantage in electronics
• It could weaken India’s growing electronics export momentum
• Logistic and quality control issues may worsen price competitiveness
   

5. Agricultural Products

• Exports to U.S.: ~$820 million (including rice, spices, tea, coffee)
• Indian-origin food products will become costlier in ethnic U.S. markets
• U.S. buyers may reduce imports or switch to alternate suppliers
• Smaller farmers and exporters could be affected

6. Steel, Chemicals & Petroleum Products

• Exports to U.S. (combined): ~$8.1 billion
• India may lose ground to competitors like Vietnam and Brazil
• Reduced export demand may hit large producers and MSMEs alike

7. Pharmaceuticals (May be exempted)

• Exports to U.S.: ~$8.7 billion
• Earlier, Trump had exempted pharma from tariffs; however, no clarity has been provided on the updated exemption list

Real-World Consequences

• Export Slowdown:: If even 25% of Indian exports to the U.S. decline, that is a potential loss of $21.75 billion in trade revenue annually
• Jobs at Risk: Sectors like textiles, jewelry, and auto parts are labour-intensive, together employing over 70 million people
• Currency & Stock Pressure: INR could see short-term pressure as export earnings dip. Export-focused stocks ( textiles, metal, jewelry) may underperform until a resolution is in sight

What Can India Do Now? Likely Government Strategies

1. Resume Talks: India is aiming for a mid-August restart to trade negotiations A deal by October 2025 could roll back tariffs
2. Concessions Package: Lower import duties on key U.S. products (like dairy or tech equipment). Agree to buy more American LNG, defence goods, etc.
3. Export Diversification: Indian exporters may explore Europe, Africa, and Southeast Asia as fallback markets
4. Support Schemes: Incentives or subsidies expected (like extended RoDTEP or interest support) for affected exporters

Conclusion: A Strategic Game With Economic Risks

This 25% tariff is not just about trade; it is a geopolitical pressure tool. But for India, the economic fallout is very real. The extent of damage depends on:

• How long the tariffs stay
• Whether India can negotiate a rollback
• How quickly businesses can adapt or pivot

Until then, both governments are in a high-stakes standoff, and Indian exporters are bracing for impact.