Trump hits India with steep 27 pc tariffs; New Delhi says studying implications

PTI, WASHINGTON/NEW DELHI, APRIL 3, 2025 : President Donald Trump slapped universal duties on all countries exporting goods to the US and additional steep levies on countries like India, potentially impacting sales of products from shrimp to steel in the world's biggest economy.

The US imposed a steep 27 percent tariff on all goods, barring pharmaceuticals, semiconductors, energy, and certain minerals not available in the United States, that are imported from India, calling the country the "worst offenders" of unfair trade practices. Export of products such as shrimp, carpet, medical devices, and gold jewelry to the US will be impacted. On the other hand, exports of electronics, textiles, and pharma will get an edge over its competitor countries. Exemption of energy from the tariffs would also mean that India can continue to export fuels like gasoil and gasoline to the US. The goods that were exempted from the tariffs made up for just over 25 percent of the total exports from India to the US.

The Indian government reacted cautiously, saying it is "carefully examining the implications" of the announcements and will also study opportunities that may arise due to this new development in the US trade policy. Trump announced the imposition of additional ad valorem duties ranging from 10 percent to 50 percent on imports from all trading partners. The baseline duty of 10 percent will be effective on India from April 5 and an additional 27 percent from April 9. The 27 percent duty would be over and above any existing levy that Indian products entering the US may currently attract.

Though the move is expected to impact India's exports of certain goods to the US, experts say that India is better-placed than its competitors, including Bangladesh (37 percent), China (54 percent), Vietnam (46 percent), and Thailand (36 percent) who face increased levies.

President Trump, in a historic measure to counter higher duties on American products imposed globally, announced reciprocal tariffs on about 60 countries. "This is Liberation Day, a long-awaited moment. April 2, 2025 will forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed, and the day that we began to make America wealthy again. We are going to make it wealthy, good, and wealthy," Trump said in his remarks from the Rose Garden at the White House on Wednesday.

He said that the tariffs imposed on India were half of what New Delhi charged the US—52 percent after factoring in trade and non-trade barriers and currency adjustments. He said that the United States charges other countries only a 2.4 percent tariff on motorcycles, but Thailand and others are charging much higher rates, like 60 percent, India 70 percent, Vietnam 75 percent, and others charge even higher rates. India's goods trade surplus with the US was USD 46 billion in 2024 (1.2 percent of GDP). Key pharma exports have been exempted for now while automobiles and components have already been hit by a 25 percent tariff just a few days back.

India's software exports to the US, estimated at around USD 103 billion in FY24, too would have no tariff impact. Pharma exports at USD 12.7 billion form almost 14 percent of total exports to the US from India. Engineering goods and specialty chemicals could be worst impacted. Automobile exports from India to the US are just USD 2.8 billion, or roughly 3 percent of total exports.

For the Indian gems and jewelry sector, already struggling since the last few years due to changing customer preferences, lab-grown diamond technology, demonetization, and soaring gold prices, the US tariff developments now create additional adverse impact, with an increased risk of job losses and margin erosion. Gems and jewelry exports stand at USD 11.5 billion or almost 13 percent of all exports to the US.