India’s practically $87 billion exports to U.S. below risk because of Trump tariffs

India’s exports to the U.S. face a steep 50% tariff after U.S. President Donald Trump on Wednesday slapped a further 25% obligation on Indian items over the nation’s oil purchases from Russia.

The additional duties — set to return into impact inside 21 days — can be stacked on prime of the 25% tariffs on New Delhi due Thursday stateside, in keeping with the chief order.

Analysts are warning that the upper U.S. tariffs threat considerably diminishing the attract of Indian exports to the U.S., in comparison with regional friends.

“India’s attractiveness as an rising manufacturing hub can be vastly undermined,” Shilan Shah, deputy chief rising markets economist at Capital Economics, stated in a word. He estimates that the U.S. spending drives round 2% of India’s GDP and the additional 25% tariff is “massive sufficient to have a cloth influence.”

India counts the U.S. as its single largest export companion. Its whole items’ exports reached about $434 billion within the 12 months ended March 2025, and practically 20%, or $86.51 billion worth of goods have been shipped to the U.S., in keeping with the worldwide official knowledge.

The ensuing drop in exports because of tariffs would imply the financial system grows by nearer to six% this 12 months and subsequent, reasonably than the 7% progress forecast previous to Trump’s announcement, Shah stated.

The potential 50% additional tariff on Indian merchandise may put a drag of a complete 0.6 share level on its GDP, in keeping with Goldman Sachs’ estimates.

India’s main exports to the U.S. are engineering and digital items, medicine and prescribed drugs, gems and jewellery, in keeping with the federal government knowledge.

With notable variance throughout industries and little readability over Trump’s plans with sector-specific tariffs, listed below are segments that doubtlessly stand to lose probably the most:

Engineering items, together with merchandise like auto components, energy gear and industrial equipment, have been India’s largest of exports to the U.S. and globally, hitting practically $117 billion within the 12 months ended March.

Round 19.16 billion price of those industrial items, or about 16%, have been offered to the U.S. over that interval.

Exports of iron, metal, and different merchandise exports accounted for 17.07% of the total engineering exports, whereas non-ferrous metals and merchandise exports contributed 10.52%. Metal exports already face 50% sectoral tariffs, worsening the outlook for the sector as the identical levy now looms massive on its different segments.

India’s whole items exports jumped 1.92% in June, partially pushed by the rise in engineering goods, which rose 1.35% to $9.5 billion.

The gems and jewellery, and textiles and apparels sectors, are additionally anticipated to be considerably jolted by the sudden hike in U.S. tariffs.

The gems and jewellery sector contributes 7% of India’s GDP and employs about 5 million staff, in keeping with a July report by a state-backed trade physique.

About 33% of India’s gems and jewellery exports went to the U.S. in fiscal 12 months 2025.

Rajesh Mehta, govt chairman of Indian jewellery maker Rajesh Exports, stated in an interview with CNBC Wednesday that greater tariffs can be an “extra burden,” whereas calling for presidency assist for the sector.

Textiles is among the many most labor-intensive sectors in India, immediately using about 45 million workers throughout the nation. Just like gems and jewellery, round 34% of textile exports went to the U.S. within the final fiscal 12 months.

“Definitely, the brand new tariff price goes to noticeably take a look at the resolve and resilience of India’s textile and attire exporters as we is not going to get pleasure from a major obligation differential benefit vis-à-vis many different nations, besides Bangladesh, with whom we compete for a bigger share of the US market,” the Confederation of Indian textile trade stated in a statement dated July 30, earlier than the worldwide hike in duties was introduced.

India’s electronics sector relied on the U.S. for 38% of its exports final fiscal 12 months, making it “probably the most uncovered” to potential dangers of the tariff exemptions being rolled again, in keeping with Alexandra Hermann, lead economist at Oxford Economics.

India overtook China to turn into the highest exporter of smartphones sold in the U.S. within the second quarter, after Apple accelerated to maneuver its meeting of extra iPhones to the South Asian nation.

In a significant, though non permanent, reprieve for corporations comparable to Apple, Trump in April introduced to exempt smartphones, computer systems and different digital items from tariffs.

India’s U.S.-bound exports of digital items have accelerated this 12 months, and its exports in March alone greater than doubled to $2.76 billion from a 12 months earlier.

Whereas the pharmaceutical sector can also be at present exempt from tariffs, Trump has threatened duties on pharma exports to the U.S. In an interview to CNBC Trump stated he would initially impose a “small tariff” on pharma, after which increase that price to as excessive as 250% in a number of years.

India’s pharma sector has a excessive dependency on U.S. patrons, with its medicine and pharma exports to the U.S. reaching over $10.5 billion for the 12 months ended March 2025, accounting for practically 35% of the class’s whole shipments, in keeping with the official knowledge.

“[India’s] Chemical substances general have considerably much less US publicity however this masks the excessive pharmaceutical sector’s US dependency therein,” stated Hermann, leaving the pharma sector extremely weak to Trump’s potential tariffs.

India additionally exported metal and aluminum to the US, however commerce in these items is taxed by way of a separate govt order.

“The U.S. may extra simply supply for provides from different import areas, however it’s a lot more durable for India to diversify away from the U.S. throughout completely different sectors,” stated Michael Wan, senior economist at MUFG Financial institution.

India competes in opposition to the likes of Europe in prescribed drugs; Vietnam and Mexico in electronics; Cambodia, Sri Lanka, Bangladesh and Vietnam in textiles; and Israel in gems and jewellery, in keeping with Wan. “If these tariff differentials stick, India’s export competitiveness will doubtless be eroded over time,” he stated.

Among the many export-reliant nations which have clinched preliminary offers with Trump, Vietnam noticed its tariffs lowered to twenty% from 46%. In his worldwide tariff adjustment, Trump additionally eased tariffs on Thailand to 19% from the “reciprocal” tariff stage of 36%, Bangladesh to twenty% from 35% and Cambodia to 19% from 36%.

Round 32% of India’s exports to the U.S. are at present exempt from tariffs, in keeping with MUFG’s estimates, together with electronics and pharmaceutical merchandise.