President Donald Trump Wednesday slapped an “extra 25 per cent advert valorem obligation” on India above the 25 per cent reciprocal tariffs that had been introduced on August 1 whereas additionally hinting at even greater levies that may very well be on the playing cards. The latest extra levy comes as a penalty for New Delhi’s continued buy of Russian oil and takes the full duties to 50% on items coming in from India, severely impacting home exports.
Introduced on July 31, the 25 per cent obligation will come into impact from August 7 (9.30 am IST). The US will implement the extra 25 per cent tariff from August 27. These shall be over and above the already current normal import obligation within the US.
How will 50% US tariff influence Indian exports?
In response to trade specialists, sectors akin to leather-based, chemical substances, footwear, gems and jewelry, textiles and shrimp shall be hit laborious by the choice. The tariffs are anticipated to make Indian items far costlier within the US, having the potential to convey the US-bound exports down by 40 to 50 per cent, assume tank International Commerce Analysis Initiative (GTRI) mentioned.
The natural chemical substances’ exports to the US will appeal to extra 54 per cent obligation. The carpets will get 52.9 per cent costlier whereas knitted attire will price 63.9 per cent and woven attire 60.3 per cent greater. Textiles, and made ups can even see a 59 per cent hike in tariffs. With the US being India’s largest marketplace for textile and attire exports, the Confederation of Indian Textile Business (CITI) mentioned it’s “deeply involved” in regards to the extreme influence the 50 per cent US tariff price for India is about to convey. “The US tariff announcement of August 6 is a big setback for India’s textile and attire exporters because it has additional difficult the difficult state of affairs we had been already grappling with and can considerably weaken our skill to compete successfully vis-à-vis many different international locations for a bigger share of the US market,” information company PTI quoted the federation as saying. It additionally urged the federal government to take rapid steps to help the sector throughout these massively testing instances.
Different items that shall be severely hit by the upper tariff charges are diamonds and gold merchandise (52.1 per cent), equipment and mechanical home equipment (51.3 per cent), and furniture, bedding and mattresses (52.3 per cent). Kama Jewellery MD Colin Shah mentioned this transfer is an entire setback for Indian exports as nearly 55 per cent of India’s shipments to the US market shall be straight hit by the choice. The price burden ensuing from the brand new tariff price will place Indian exporters at a 30–35 per cent aggressive drawback in comparison with their friends from international locations with lesser reciprocal tariff, he mentioned. “Many export orders have already been placed on maintain as consumers reassess sourcing selections in gentle of upper landed prices. For numerous MSME-led sectors, absorbing this sudden price escalation is solely not viable. Margins are already skinny, and this extra blow might drive exporters to lose long-standing purchasers,” PTI quoted Shah as saying.
In response to a Kolkata-based seafood exporter and MD of Megaa Moda Yogesh Gupta India’s shrimp will now grow to be costly within the US market. “We’re already going through enormous competitors from Ecuador because it has solely 15 per cent tariff. Indian shrimp already attracts a 2.49 per cent anti-dumping obligation and a 5.77 per cent countervailing obligation. After this 25 per cent, the obligation shall be 33.26 per cent from August 7,” PTI quoted Gupta as saying.
In 2024-25, the bilateral commerce between India and the US stood at USD 131.8 billion (USD 86.5 billion exports and USD 45.3 billion imports). After imposition of fifty per cent tariff, the sectors akin to textiles/clothes (10.3 billion), gems and jewelry (12 billion), shrimp (USD 2.24 billion), leather-based and footwear (USD 1.18 billion), chemical substances (2.34 billion), and electrical and mechanical equipment (about USD 9 billion), will bear the brunt.
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America has imposed the extra duties solely on India as penalty for Russian imports whereas different consumers akin to China and Turkey, have thus far dodged such measures.
Exporters hope that early finalisation of the India-US bilateral commerce settlement will assist in coping with the tariff challenges. The negotiations between India and the US are nonetheless underway for an interim commerce deal, aiming to conclude the primary section of the pact by fall (October-November) this 12 months.
— With inputs from PTI
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