India-US Tariff War: Trump's tariff will cause this much loss to India- the government has estimated it

India-US Tariff War: The 25 percent additional tariff imposed on India by US President Donald Trump is going to be implemented from August 27, 2025, after which India's US exports are expected to be heavily affected. According to estimates by the Government of India, this tariff may cause a loss of exports worth more than $ 48.2 billion. Let us take a detailed look at the order of this tariff, its impact and India's position.

Trump's order: What is the whole matter?

Currently, a 25 percent import duty is applicable on Indian goods in the US market. In response to the purchase of crude oil and military equipment from Russia, the US has decided to impose an additional 25 percent duty from August 27, 2025. The US Department of Homeland Security clarified in a draft order issued on Monday that this increased duty will apply to Indian products that will be imported for consumption or removed from the warehouse after 12:01 am (Eastern Daylight Time, EDT) on August 27, 2025. However, some exemptions have also been given. For example, goods that will reach the US before September 17, 2025 and are certified by the importer to US customs with a special code may be exempted from this additional duty.

Apart from India, Brazil is the only other country that the US has chosen to face a 50 percent import duty. The move is believed to be a result of US dissatisfaction over India's Russian oil purchases in the context of the Russia-Ukraine war. White House press secretary Caroline Levitt said the tariff is part of putting pressure on India to end the Russia-Ukraine conflict. In addition, US Treasury Secretary Scott Bessant has accused India of profiteering by reselling Russian oil. India has strongly opposed this action, calling it "unreasonable and unwise".

How much impact will it have on India's exports?

• According to the Ministry of Commerce of the Government of India, based on the 2024 trade value, this additional duty will be applicable on goods worth about $48.2 billion exported to the US. This tariff will particularly affect the following sectors:
• Textiles and apparel: The Indian textile industry, which has a large share in the US market, will be affected by this tariff.
• Gems and jewellery: This major export sector of India may lag behind in competition.
• Shrimp, leather, and footwear: These industries will also suffer losses due to high duty.
• Animal products, chemicals, and mechanical machinery: Exports will also be affected due to rising costs in these sectors.

However, sectors such as pharmaceuticals, energy products, and electronics are exempted from this tariff, so these industries will not be affected immediately. Nevertheless, the impact of the tariff may be clearly visible in the export figures of September 2025.

Impact on India's competitive position

After the imposition of this new tariff, India's competitors may have a better position in the US market, as they have relatively lower duties.

For example:

Myanmar: 40% US duty

Thailand and Cambodia: 36% duty

Bangladesh: 35% duty

Indonesia: 32% duty

China and Sri Lanka: 30% duty

Malaysia: 25% duty

Philippines and Vietnam: 20% duty

The imposition of 50 percent duty on India and Brazil may reduce the competitiveness of Indian products compared to these countries. This will make it challenging for Indian exporters to survive in the US market.

Options before India

• The Indian government is taking several steps to deal with this situation. Some of the possible strategies are as follows:
• Retaliatory tariffs: If trade talks with the US fail, India may impose retaliatory tariffs on select US products (such as agricultural products, pharmaceuticals, and technical equipment). India took such a step in 2019 by imposing additional duties on US almonds, apples, and steel.
• Alternative markets: India can turn to alternative markets such as Russia, the European Union, the Gulf Cooperation Council (GCC), and African countries. Apart from this, India is working on further strengthening free trade agreements (FTAs) with the UK, UAE, and Australia.
• Trade strategy with Russia: India can further strengthen the rupee-ruble payment system with Russia to reduce the impact of US tariffs.
• Promotion of domestic industries: The Indian government can try to reduce the impact of tariffs by providing subsidies or incentives to textiles, IT, and other affected industries.

Future prospects

Experts believe that the round of trade talks between India and the US may resume, which may lead to a reduction in tariffs. Prime Minister Narendra Modi said in a public meeting in Ahmedabad, "No matter how much pressure comes, we will continue to increase our strength to withstand it." Apart from this, Foreign Minister S Jaishankar has described oil imports from Russia as essential for India's energy security and national interests.

The Indian government has also made it clear that it will not compromise on its national interests. Also, the government is working towards strengthening economic relations with countries like Japan and China, so that alternative trade opportunities can be taken advantage of.