US Tariffs on India: Impact, Retaliation & Affected Goods List

Have you noticed how US tariffs on India have become a hot topic of discussion in global trade? These tariffs are essential taxes that the US government imposes on goods imported from India. When Indian products enter the United States, importers must pay these duties at the point of entry. These additional costs increase the overall price of the imported goods, which often leads to higher prices in the US domestic market. These measures reduce the competitiveness of Indian products in the US market.

Tariffs are not just about revenue; governments use them to control imports, collect revenue, and decrease foreign competition within domestic borders. Often, when one country raises tariffs, the affected country responds with reciprocal tariffs to match those higher duties and protect its own trade interests. This approach set the stage for a new wave of trade measures.

In 2025, US tariffs gained significant global attention, with several nations even questioning the rationale behind these tariff policies. India was also affected by these US tariff impositions. In August 2025, the US imposed tariff on India of 50% on India as part of its revised trade policy. This sharp rise caused panic among Indian exporters and significantly disrupted the Indian market dynamics. 

This blog explains the detailed impact of US tariffs on India. It also lists the Indian goods and sectors affected by these tariff measures and examines their broader economic implications.

Understanding US Tariffs in India: Basics & the 2025 Policy

Tariffs are taxes that governments impose on imported goods to protect domestic industries from global competition. While the terms US tariffs and “duties” are often used interchangeably, duties refer specifically to the charges collected at customs. Non-tariff barriers, on the other hand, include regulations, quotas, or standards that restrict imports without a direct tax.

US Tariff Policy Shift in India

On April 2, 2025, the US introduced a reciprocal tariff mechanism through Executive Order 14257. It allowed the US to counter high trade barriers imposed by other countries. For India and other trading partners, this policy meant that US imports from these countries faced sharply increased duties. 

Under this mechanism, the US specifically raised tariffs on Indian goods.  It imposed a combined rate of 50% through a 25% reciprocal tariff and a 25% penalty duty.

Timeline of Increase in US Trade Tariff Rates in India:

Date	Event	Tariff Rate
April 2, 2025	First reciprocal tariff announced	Announcement of an increased base tariff to 25%
August 7, 2025	Base Tariff rate increased	Full operational enforcement of 25% tariff rate on Indian goods.
August 27, 2025	Tariff doubled to 50%	Imposed a 25% penalty tariff. The total tariff rate marked 50%.

The escalation shows how quickly trade barriers intensified for India. The initial announcement signaled rising protectionism, but the August increase added pressure on exporters. This timeline highlighted the urgency for Indian exporters to adapt to changing trade policies and manage their trade finances. 

Why Was India Targeted? 

India was targeted for two main reasons that were: 

1. Trade Imbalance and Tariff Criticism: India became a focus of US tariff measures due to the perceived trade imbalance between the two countries. American policymakers argued that India’s tariffs on US products were higher than acceptable. These goods included agricultural products, automobiles, medical devices, etc. They asserted that this unfair trade practice limited India’s market accessibility for US exporters. This narrative framed India as a country that needed to adjust its trade practices to create a more balanced bilateral trade relationship.
2. Geopolitical Context: Another key factor was India’s continued purchase of Russian oil, which conflicted with US foreign policy objectives. The US used tariffs as a tool not only to address trade concerns but also to influence geopolitical decisions. With the tariff war, the US signalled that energy trade choices with Russia could affect broader economic relations.

These factors contributed to making India a central point of US trade policy in 2025.

USA’s Tariff Rates on Indian Goods: Affected Goods List

Most Indian exports to the US, including textiles, leather, gems and jewellery, and other manufactured goods, are subject to this enhanced tariff burden. Under the revised tariff framework, many of these products are now subject to some of the steepest duties imposed by the US on any major trading partner.

For a detailed understanding of tariff jumps, refer to the table below: 

Product Category	Tariff Rate (Aug 7, 2025)	Tariff Rate (Aug 27, 2025)
Textiles & Apparel	~25% → ~50%	~50%
Gems & Jewellery	~25% → ~50%	~50%
Leather & Footwear	~25% (20.8–29.5%)	~50% (45.8–54.5%)
Marine Products	~33.26% (incl. anti‑dumping & CVD)	~58.26%
Chemicals & Organic Goods	~25%	~50%
Automobiles & Auto Parts	~25%	~50%
Iron, Steel & Aluminium	~25% (5–12.5% for industrial)	~50% (30–37.5%)
Agricultural Products	~25% (e.g., onions ~25.54%)	~50% (e.g., onions ~50.54%)
Machinery & Engineering Goods	~25%	~50%
Rubber Items	~25%	~50%
Ceramic, Glass, Stone	~25%	~50%
Furniture	~25%	~50%
Paper & Wood Products	~25%	~50%

Under the revised tariff system, most Indian goods faced duties of around 50%, making the US market significantly more expensive and less competitive for exporters. In some cases, the effective tariff burden exceeds 50% due to the application of additional trade remedies.

Some products like marine and seafood exports face a base tariff of 25%, plus anti-dumping or CVDs of 8%, and 2025 penalty duties. This brings the total tariff rates on these products to over 50%.

• Anti-dumping duties are extra charges imposed when a country believes imports are being sold below fair market value.  
• Countervailing duties (CVDs) are added when exports benefit from government subsidies, giving them an unfair price advantage.

At the same time, exemptions continue to remain for strategic sectors such as pharmaceuticals, electronics, energy resources, and critical minerals. These were exempted to protect key supply chains and public health considerations.

Economic & Trade Impact of US Trade Tariffs on India

The US tariff increases in 2025 had wide-ranging effects on India’s trade and economy. They affected exports, sectoral performance, macroeconomic indicators, and business strategies. Understanding the US tariff impact on India helps grasp immediate and long-term consequences for Indian exporters and the broader market.

1. Short-Term Export Impact

The immediate effect of the US tariff hike was felt across Indian export sectors. Higher duties raised the cost of Indian goods in the US. This forced exporters to reassess pricing, contracts, and delivery timelines.

• The sharp rise in US tariffs on Indian imports in 2025 directly increased costs for Indian exporters, making their goods less competitive in the US market.
• Export earnings from key sectors like textiles, gems, and marine products faced immediate pressure. Some companies even reported order cancellations or delayed shipments.
• Overall, the tariff surge created uncertainty in trade flows, affecting cash flows and short-term revenue for exporters.

This increase in duties forced many exporters to reassess pricing strategies, renegotiate contracts, and adjust delivery timelines to retain business. In the first five months after higher tariffs were implemented, India’s exports to the US reportedly declined by about 28.5%, reflecting weaker demand as US buyers responded to rising costs. 

2. Sectoral Impact

Different sectors experienced the US tariff increase in varying ways. While some were able to absorb part of the cost, others faced significant revenue and employment challenges.

• Textiles & Apparel: Clusters in Tiruppur, Ludhiana, and NCR saw a reduction in orders as US buyers sought cheaper alternatives.
• Gems & Jewellery: Diamonds and gold exports faced revenue loss due to higher duties. MSMEs in Surat, which dominate diamond processing, were among the most vulnerable.
• Marine & Seafood: Shrimp and fish exports lost competitiveness, particularly against countries like Ecuador and Vietnam.
• Metals & Chemicals: Iron, steel, aluminium, and specialty chemicals saw reduced demand, especially from SMEs.
• Effect on SMEs & Employment: Small and medium enterprises faced tighter margins, production cuts, and, in some cases, layoffs in export-dependent clusters.

Collectively, these tariff-affected sectors account for over two-fifths of India’s total merchandise exports to the US.

3. Macro-Economic Effects

Beyond individual sectors, US tariffs on Indian imports influenced India’s broader economic indicators. Export slowdowns, currency fluctuations, and investor sentiment shifts collectively shaped short-term macroeconomic outcomes. While tariffs alone do not determine macro outcomes, they added pressure to an already uncertain global trade environment.

• GDP Growth: Higher tariffs could modestly slow India’s export-driven GDP growth in the short term. However, India’s total merchandise exports still grew modestly, about 2.9% to roughly USD 220 billion in April–September 2025, despite slower shipments to the US market. This suggests resilience in external demand even amid rising duties.
• Currency Volatility: The Indian rupee experienced fluctuations due to changes in trade balances and investor sentiment. Some market outlooks project the rupee weakening toward ₹92 per US dollar in early 2026, reflecting broader sentiment in currency markets.
• Stock Market Impact: Export-linked sectors saw negative market reactions, with investors factoring in reduced earnings from US sales. Indices like the Sensex and Nifty experienced volatility as foreign institutional investors offloaded equities worth over ₹6,500 crore amid tariff concerns

4. Impact Beyond Goods

The effects of US tariffs in India extended beyond direct trade, prompting Indian exporters and businesses to rethink strategies, supply chains, and market diversification for long-term resilience.

• Global Value Chains: Companies reconsidered supply chain strategies, including sourcing and manufacturing locations, to reduce tariff exposure.
• Diversification to Alternate Markets: Indian exporters explored new markets in Europe, the Middle East, and Southeast Asia to offset reduced US demand.
• Strategic Adjustments: Firms began investing in product reclassification, cost optimization, and exploring tariff exemptions to maintain competitiveness.

The 2025 US tariff policy thus had wide-ranging effects, from immediate revenue losses to long-term supply chain and market strategy adjustments.

India’s Policy and Trade Strategy Against US Tariffs

In response to the sharp rise in US tariffs on Indian imports, India adopted a combination of diplomatic, trade, and domestic measures. The government focused on negotiating with the US, adjusting certain tariff policies, and supporting exporters to mitigate immediate losses. These strategies aimed to protect Indian businesses, maintain market access, and strengthen long-term trade.

1. Government & Trade Negotiations

India actively engaged with the US through formal diplomatic channels to address the tariff tensions. Trade negotiations focused on explaining India’s tariff structure, market access challenges, and seeking exemptions or reductions. These discussions aimed to maintain bilateral trade relations while protecting Indian exporters from sudden cost shocks.

2. Tariff Rationalization at Home

As part of its response, India reviewed and adjusted certain domestic tariffs on US imports. By offering tariff concessions, India aimed to address US concerns and demonstrate its willingness for fair trade. This was aimed at preventing further escalation of reciprocal duties. The approach balanced domestic industry protection with strategic trade diplomacy.

3. Support Measures for Exporters

The Indian government introduced measures to help exporters cope with higher US tariffs:

• Subsidies and financial support: Exporters received incentives to offset increased costs. India approved credit guarantees and support worth over ₹45,000 crore to offset cost pressures arising from tariff disruptions. 
• Market diversification: Initiatives encouraged businesses to explore alternative markets in Europe, the Middle East, and Southeast Asia. Nearly 59% of India’s export growth in April-September 2025 came from 24 markets outside the US. This highlighted the expanding export footprint across Europe, the Middle East, Africa, and Asia.
• Policy support: Guidance on product reclassification, tariff exemptions, and supply chain optimization helped exporters maintain competitiveness despite rising duties. For instance, the Indian government launched a ₹4,531 crore (about $545 million) Market Access Support scheme in late 2025 to help MSMEs and priority sectors expand global market access through participation in international fairs and trade shows.

These combined strategies allowed India to manage the short-term impact of US tariffs while preparing exporters for longer-term resilience in global markets.

What do US Tariffs Mean for Indian Businesses & Importers? 

The US tariff changes in 2025 created ripple effects across Indian businesses and consumers. Exporters faced higher costs and strategic challenges, while importers and MSMEs had to navigate compliance and supply chain adjustments. Understanding these implications helps businesses prepare and adapt to evolving trade dynamics. 

1. For Indian Exporters

The US tariff hike forced exporters to rethink pricing and market strategies. Companies needed to adjust prices, absorb some costs, or find alternative markets to maintain competitiveness. Businesses also explored product reclassification and cost optimization to mitigate the impact of higher duties. 

2. For Indian Consumers

Higher US tariffs indirectly affected Indian consumers, as industries relying on imports like semiconductors and automobiles faced higher costs. Manufacturers are likely to pass these increases onto retail prices, raising consumer costs.

Additionally, import-dependent sectors such as pharmaceuticals & automotive parts could experience supply delays or price volatility. This will affect availability and affordability for consumers. Even goods not directly imported from the US might see cost increases due to global supply chain adjustments. 

3. For E-commerce and MSMEs

Small businesses and online sellers faced new challenges in compliance and logistics. They had to manage customs documentation, supply chain adjustments, and tariff-related regulations, which increased operational complexity and cost. MSMEs, in particular, needed guidance and support to remain competitive in affected export markets. 

US tariffs highlighted the need for Indian businesses and consumers to adapt quickly to changing trade conditions.

With ongoing changes in US tariff policies, exporters, importers, and MSMEs need to make sure they have a valid Import Export Code (IEC) to avoid interruptions in international trade. RegisterKaro helps businesses handle IEC registration and stay compliant with India’s trade regulations, so they can focus on their export operations without added stress.

Global Comparison: US Tariffs on India vs Other Countries

This section compares US tariffs on India with those applied to other countries and highlights their impact on global trade dynamics.

Parameter	India	China	Vietnam	EU Countries
Effective Tariff Range on Key Goods	~45%–50% on most affected exports	~50%–60%+ in overlapping sectors	~10%–25% (mostly base tariffs)	~10%–20% (sector-specific)
Tariff Structure	25% reciprocal tariff + 25% penalty duty	Legacy Section 301 tariffs + additional measures	Standard MFN tariffs, limited penalties	MFN tariffs, selective safeguard duties
Export Value Impacted	~$48–50 billion worth of exports	>$250 billion historically exposed to tariffs	Lower absolute exposure, sector-specific	Moderate exposure, diversified product mix
Sectors Most Affected	Textiles, gems & jewellery, leather, marine, metals	Electronics, machinery, metals, consumer goods	Apparel, footwear, electronics assembly	Automobiles, machinery, luxury goods
Relative Cost Competitiveness in the US Market	Low (high landed cost)	Low to Moderate (scale offsets some cost)	High (tariff advantage)	Moderate to High
Supply-Chain Outcome	Order diversion; market diversification	Partial decoupling; supply-chain relocation	Order inflows from US buyers	Stable sourcing; selective gains
Strategic Advantage Post-Tariffs	Scale + diversification beyond the US	Manufacturing depth + scale	Tariff arbitrage + proximity to China	Trade agreements + regulatory stability

By 2025, tariffs had become a decisive factor in global competitiveness. Countries facing lower U.S. tariff barriers gained measurable sourcing advantages. On the other hand, higher‑tariff economies such as India and China were forced to offset cost disadvantages through scale, efficiency gains, and market diversification.

The 2025 US tariffs on India had far-reaching effects on trade, businesses, and the economy. Indian exporters faced higher costs and market challenges, while supply chains and global competitiveness were reshaped. Strategic responses, including trade negotiations, tariff rationalization, and support measures, helped mitigate some impacts. Businesses that adapted through market diversification and cost optimization were better positioned than those that couldn’t absorb the shock.