With US President Donald Trump’s April 2 deadline for imposing new tariffs fast approaching, businesses and policymakers are unsure how the changes will be applied. While these tariffs aim to reduce America’s trade deficit, they come at a time when the US is also negotiating a new trade deal with India.

India’s trade with the US

The US has been India’s largest trading partner from 2021-22 to 2023-24, making up:
 18% of India’s exports
 6.22% of India’s imports
 10.73% of total trade between the two countries

India exports goods from 30 different sectors to the US, including six in agriculture and 24 in industry. The impact of the new tariffs will depend on whether they are applied to specific products, entire sectors, or all imports from India.

Which Indian exports will be affected?

If sector-wide tariffs are imposed, here are the industries that will face higher costs:

1. Alcohol, Wines, and Spirits

This sector faces the highest tariff hike of 122.10%. However, India’s exports in this category are only $19.2 million, so the overall impact may be small.

2. Dairy products

Exports of ghee, butter, and milk powder worth $181.49 million will see a 38.23% tariff hike. This will make these products more expensive in the US, reducing their market share.

3. Fish, meat, and processed seafood

A 27.83% tariff hike will affect $2.58 billion in exports. Shrimp exports will be hit the hardest.

4. Animals and animal products

A 27.75% tariff increase will impact $10.31 million worth of exports.

5. Processed food, sugar, and cocoa

This category, worth $1.03 billion, will see a 24.99% tariff hike. Indian snacks and confectionery will become costlier for US buyers.

6. Footwear

A 15.56% tariff hike will raise prices for Indian shoes in the US.

7. Diamonds, gold, and silver

Exports in this sector total $11.88 billion. A 13.32% tariff hike may make Indian jewellery less competitive in the US market.

8. Pharmaceuticals

A 10.90% tariff increase will push up the prices of generic medicines and specialty drugs from India.

9. Edible oils

Coconut and mustard oil will face a 10.67% tariff hike, making them pricier in the US.

Not all industries will face new tariffs. Ores, minerals, petroleum, and garments are expected to remain tariff-free under the proposed plan.

 

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