In what could be a “worst-case scenario” Donald Trump hints at imposing 20-25% tariffs on India, plus penalty for trading with Russia from August 1, 2025. American President Donald Trump on Tuesday threatened India to impose a reciprocal tariff of 25% and would penalize India for buying Russian Arms if it fails to finalise India-US Trade Deal. Though no official statement has been released so far from Indian and American Officials, the warning social media post has already raised eyebrows and especially among Indian exporters.
Tariff Rates on India
The new tariffs are expected to impact India’s goods exports to the U.S., estimated at around $87 billion in 2024, including labour-intensive products such as garments, pharmaceuticals, gems and jeweler, and petrochemicals. A tariff rate of 20-25% will be imposed on all goods exported by India to the United States, amidst the reciprocal tariffs falling in the range of 10%-49% for other countries. Apples will be given duty free entry to the United States. Indian Rice attracts a tariff rate of 2.7% in US, whereas for passenger vehicles a tariff of 2.5% is imposed.
Let us see how India will be Impacted if Trump Imposed 25% Tariff
- Indian Smartphone Market is likely to be Impacted from Tariff
Only two countries (China & India) having access to export smartphones to US and especially the iPhones. Even if the reciprocal tariff is imposed India is poised to pay 25% duty which is still less than China that pays 30% duty. Hence, Indian Smartphone market will have no impact of tariffs.
- Pharmaceutical Sector
For decades, Indian pharmaceuticals entering the US market have been tariff-free however after Trump threat to impose a reciprocal threat on Indian goods Indian pharmaceuticals will be impacted from this. The US is India’s largest overseas pharma market, with exports rising to $9.8 billion in FY25, up 21 per cent from $8.1 billion the previous year, which is 40% of India’s total pharma exports. Tariff will hurt India the most in the pharmaceutical sector.
Will Indian Rice Exports be Impacted?
Approximately 4.5% to 5% of India’s total basmati rice exports are sent to the USA. In fiscal year 2024, this amounted to roughly 2.3 lakh tonnes out of a total of 52.4 lakh tonnes exported globally.
Exporters May Only Face a Short-Term Discomfort
The tariff may cause problem for small exporters as the tariff is seen only a temporary hurdle and not a roadblock. In this context, the National President of Indian Rice Exporters Federation (IREF), Dr. Prem Garg in his previous interview with PTI said that with “strategic planning and flexibility Indian exporters can expand their footprint in the US market”.
Long‑term impact seen as limited With origins like Pakistan, Vietnam, and Thailand face even higher U.S. tariffs (up to 46%) than India, which will cushion India’s loss of market share. India remains competitive in US market.