 "US President Donald Trump has previously called India a ‘tariff king’ and repeatedly refer to the massive trade deficit between the true countries. Reuters")
US President Donald Trump shocked many when he announced 25 per cent tariffs on India starting August 1.
Trump made the announcement on social media.“Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country”, Trump wrote on his Truth Social platform.
Trump has previously called India a ‘tariff king’ and repeatedly refer to the massive trade deficit between the true countries.
The development comes in the backdrop of India and the US negotiating a bilateral trade deal , talks for which have seemingly stalled.
India has responded to Trump, saying it “has taken note of a statement by the US President on bilateral trade and the government is studying its implications”.
But what will get costlier for Americans? And how will Trump’s tariffs impact India?
Let’s take a closer look
What will get costlier for Americans?
First, let’s look at bilateral trade between the two nations.
Bilateral trade between the two nations touched around $130 billion in 2024.
India’s exports to the US touched $86.5 billion in the previous fiscal year – a rise of 11.6 per cent.
Imports, meanwhile, increased to $45.3 billion – a rise of 7.4 per cent.
India is operating at a trade surplus of around $40 billion with the US.
Trump has repeatedly made mention of this fact, and in his mind he thinks countries that operate at a trade surplus are ‘ripping America off’.
Unfortunately, it is the people living in America who will bear the brunt of these tariffs straight away.
Americans will have to shell out more for electronics, auto parts, diamonds, diamonds and textiles from India.
Gems and jewellery – an $8.5 billion sector – will immediately become more expensive for US consumers.
The US is the biggest importer of diamonds and gold from India.
India also sends raw gemstones and finished pieces to America.
Clothing prices could rise as high as 17 per cent, if Trump follows through on his 25 per cent tariff threat to India.
India’s textile exports to the US were valued at $2.5 billion in 2025.
Cars could also become more expensive.
India in 2023 sent auto parts – including engine parts, brakes, gear assemblies and wiring harnesses – worth over $2 billion to the United States.
This could inflate the costs of car repair and affect US assembly lines.
Auto parts from India are a key component for US automakers keeping prices low.
Almost no automakers have manufacturing facilities in the United States.
Though pharma is exempted for now, experts have said that could change at the drop of a hat.
If Trump levies tariffs on pharma, the cost of generic drugs including important medicine for cancer, diabetes and heart conditions could also spike for US consumers.
As per the US FDA, India provides around 40 per cent of America’s generic drugs.
India’s pharma exports are valued at $7.5 billion.
How will Trump’s tariffs impact India?
Experts say the tariffs could shrink India’s GDP between 0.2 per cent and 0.5 per cent.
They noted that this 25 per cent tariff on India is higher than its competitors such as Indonesia (19 per cent), Philippines (20 per cent) and Vietnam (20 per cent).
Indian manufacturers are preparing themselves for the fallout.
India comprises around a third of the US’ imports in the textiles and apparels segment.
India would be unable to compete with Bangladesh and Vietnam in this segment, which could hurt exports of garments, linens, and towels
“Our main export sectors to the US are pharma, electronics, gems and jewellery and textiles and apparel,” Rahul Ahluwalia, founder-director at the Foundation for Economic Development, told India Today.
“Of these the first two were exempted from the tariff increase earlier. If that exemption continues to apply, gems and jewellery and textile and apparel will be the worst affected," he added.
“The Indian gem and jewellery sector, in particular, stands to be severely impacted. The United States is our single largest market, accounting for over $10 billion in exports—nearly 30% of our industry’s total global trade. A blanket tariff of this magnitude will inflate costs, delay shipments, distort pricing, and place immense pressure on every part of the value chain—from small karigars to large manufacturers,” Kirit Bhansali, Chairman, Gem and Jewellery Export Promotion Council, told Moneycontrol.
“We urge the US administration to reconsider, and call on both governments to engage in constructive dialogue that safeguards bilateral trade and protects the millions of jobs that depend on it on both sides”.
Companies like Tata Motors and Bharat Forge could see lay-offs as a result of declining demand in the US.
Those assembling smartphones and solar panels, businesses which already exist on razor-thin margins, are also set to take a hit.
Experts say Trump has imposed these tariffs as a negotiating tactic.
However, they warned that India needs to make a deal with the US.
“A 25 per cent tariff will leave us worse off relative to both Vietnam and China, who are the main countries we are competing against for investment and industrialisation. We should aim to reach a deal with the US on trade policy… This approach will also allow us to carry out much-needed reform and be aligned with our long-term competitiveness and strategic interests”, Ahluwalia said.
Garima Kapoor, Economist and Executive Vice President, Elara Capital told Financial Express, “The 25 per cent tariff rate is certainly a negative development as it compares to lower rates for peers such as Vietnam, Indonesia and Philippines which compete with India in a similar category of labour-intensive products and electronic goods.”
Could hurt Apple’s growing operations in India
Experts say Trump’s tariffs could hurt Apple’s growing operations in India.
The tech giant has been making a concerted effort to shift its operations from China to India.
Nearly half the iPhones shipped to the US in recent months have been manufactured in India.
Data shows that Apple sent $5 billion worth of iPhones to the US from April to June.
This comprised almost 70 per cent of its total smartphone exports.
That figure, during the same months last year, was at $3 billion.
Experts say this development has clearly aroused Trump’s ire.
The US president earlier voiced his displeasure at Apple shifting its manufacturing operations to India. He is aiming to have companies around the world bring manufacturing jobs to the US.
“That rise in exports has clearly raised red flags for Trump, who views Apple’s growing dependence on India with suspicion," Neil Shah, Vice-President at Counterpoint Research, told Moneycontrol.
“This appears to be a move to pressure Apple into bringing more manufacturing back to the US. By imposing tariffs on India-made iPhones, Trump is signaling that even Apple won’t get a pass unless it builds domestically," he added.
This could be a blow to India’s designs of becoming a manufacturing powerhouse.
India and the US have announced talks will resume on August 25.
Will India and the US make a deal? Or will both sides dig in?
Stay tuned to find out.
With inputs from agencies