Trump tariffs to impact 55% of Indian exports to US: Govt tells Parl ‘will secure national interest’

The government on Monday told Parliament that more than half of the country’s shipments to its largest export market will face sharply higher duties after Washington’s latest trade move. About 55 per cent of India’s merchandise exports to the United States are subjected to a reciprocal tariff rate of 25 per cent from August 7, 2025. This follows US President Donald Trump’s decision last week to impose an additional 25 per cent tariff on Indian goods, effectively doubling total duties to 50 per cent for most products.

Minister of State for Finance Pankaj Chaudhary confirmed in a written reply that the estimate factored in the 25 per cent tariff Washington had already imposed earlier. He stressed that the Department of Commerce was in constant touch with exporters, industry representatives and other stakeholders to gauge the likely damage and to shape an appropriate response.

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The trigger for the escalation, US officials have said, was India’s continued purchase of Russian oil despite repeated warnings from Washington. Trump’s administration described the move as a punitive measure, targeting a key trade partner over what it sees as a breach of geopolitical discipline.

Industry watchers have noted that the new levy pushes India into the same high-tariff bracket as Brazil, with both countries now facing 50 per cent duties on most exports to America. Many of India’s competitors in the US market will be much better placed: Myanmar’s duties stand at 40 per cent, Thailand and Cambodia at 36 per cent, Bangladesh at 35 per cent, Indonesia at 32 per cent and China and Sri Lanka at 30 per cent. Even Malaysia’s 25 per cent and Vietnam’s 20 per cent look comparatively modest.

Government pledges to ‘secure national interest’

In its statement to Parliament, the government stressed upon the fact that it attaches the highest importance to protecting the interests of farmers, entrepreneurs, exporters and MSMEs. The government assured that all necessary steps would be taken to secure national interest in the face of the tariff shock. Consultations with affected sectors are underway, with the aim of mitigating losses and identifying alternative market opportunities.

The Commerce Department has been tasked with collecting feedback from exporters to assess how factors such as product differentiation, contractual obligations and demand cycles will influence the eventual impact.

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Exporters warn of severe setback

The Federation of Indian Export Organisations (FIEO) called the US decision “extremely shocking” and warned that it could inflict significant damage on sectors such as textiles, marine products and leather goods. FIEO Director General Ajay Sahai said the higher duties would make Indian products between 30 per cent and 35 per cent less competitive than those from countries with lower tariff rates, a PTI report said earlier.

Sahai noted that several export orders had already been paused while American buyers reconsidered sourcing plans in light of higher landed costs. For MSME-dominated sectors, he argued, absorbing the sudden escalation was not viable given already thin margins, and many risked losing long-standing clients.

Trade volumes and economic stakes

The dispute comes against the backdrop of a large and growing trade relationship. According to government estimates, goods trade between the two economies—the world’s largest and fifth-largest—was worth about $87 billion in the last fiscal year. Other data put total bilateral trade in 2024–25, including services, at $131.8 billion, with India exporting goods worth $86.5 billion and importing $45.3 billion from the United States.

Economists said that given the size of the US market for Indian exporters, the new duties could dent overall export growth and put additional pressure on the current account. The affected sectors, they added, would need either quick relief through negotiation or support in diversifying their markets.

A search for solution

New Delhi has signalled that it will continue to explore diplomatic and trade avenues to address the situation, but exporters have warned that without rapid intervention, shipments will slow, and market share could erode quickly.

Whether the standoff leads to a negotiated solution or ushers in a prolonged period of higher trade barriers will determine how much of India’s export basket can be salvaged from the impact of this steep tariff escalation.