Trump's 50% tariffs fail to hit $30 bn of Indian exports: Pharma, smartphones exempted

Despite US President Donald Trump’s decision to double tariffs on Indian goods to 50% from August 6, a major chunk of Indian exports worth nearly $30 billion remains untouched for now. Key sectors like pharmaceuticals and electronics including smartphones and semiconductors continue to enjoy exemptions under a carve-out list that shields them from higher duties.

The tariff hike, justified by the Trump administration as a response to India’s continued procurement of Russian energy and arms is expected to impact India’s labour-intensive export segments. However, shipments of critical products such as medicines, mobile phones and energy supplies have been spared at least for the moment.

In FY25, India exported pharmaceuticals and electronics worth $10.5 billion and $14.6 billion respectively to the US, together accounting for over 29% of its total exports to America which stood at $86.5 billion. Interestingly, India’s petroleum exports amounting to $4.09 billion have also been excluded from the latest tariffs due to their placement in the energy exemption list.

These high-value categories had previously escaped the initial 25% tariff announced on July 30 as well. While these exemptions offer temporary relief, uncertainty remains. Trump has warned of tariffs going as high as 250% on foreign-manufactured pharmaceuticals and the status of smartphones may shift depending on future policy decisions.

The executive order signed on August 6 clarified that all goods currently listed under exemptions would continue to receive preferential access to the US market at lower or zero tariffs.

The original 25% tariff was introduced after talks to finalise a limited trade deal between the two countries collapsed. That move, which takes effect on August 7, paved the way for this latest escalation. India and the US are still working towards concluding a broader Bilateral Trade Agreement (BTA), targeted for finalisation by the end of the year.

Quick Reads

View All

Greek farmers bring nation to standstill as blockades hit ports, roads and airports

Amid record trade surplus, China has a big worry — factory deflation is now in 38th month