Trump's 50% tariff could slash India's US exports by $65B
What's the story
India could see a major hit of $65 billion in merchandise exports to the US, due to President Donald Trump's recently announced 50% tariff. A senior government official told Moneycontrol that sectors such as textiles, gems and jewelry, and marine products are likely to be the most severely impacted by this move. The official said that while exporters may have absorbed an initial 25% tariff, doubling it has changed the game.
Potential relief
Trade deal with US could mitigate tariff impact
The official also noted that the impact of these tariffs on Indian exports could be lessened if New Delhi and Washington strike a trade deal. Such an agreement could potentially bring down the tariff rate on India. Currently, India is in talks with the US for a Bilateral Trade Agreement (BTA), with the last round of discussions held in July.
Exemptions
Some Indian goods exempted from higher duties
Notably, Indian goods worth around $30 billion, covering pharmaceuticals, some electronics like smartphones, and energy, are safe from the higher duties for now. These products are either levied lower or zero tariffs under an exemption list. However, the official warned that there could be second and third-round effects of these tariffs on labor-intensive sectors, which could offset some advantages from exemptions.
Scenario
50% tariff will be implemented on August 27
On August 11, the Finance Ministry announced that about 55% of Indian exports to the US would face a 25% reciprocal duty. Earlier, on August 6, Trump signed an executive order accusing India of colluding with Russia, raising the effective tariff rate on the country to 50% from the 25% set in a July 31 order. While the 25% duty on most Indian exports took effect on August 7, the higher 50% tariff will be implemented on August 27.