US Tariffs on Imports from India: Irrational or Punitory?

- By Dr H A C Prasad, Former Senior Economic Adviser, MOF, GOI -

Textiles, Gems and Jewellery besides Electrical Machinery are the major items in our export backed to US. These are hit badly by Trump Tariff. According to Dr. Prasad, Former Economic Advisor to Finance Ministry is to diversify exports to new market. The impact is diluted by exempt sectors like Pharma where India is a major exporter to US. Further, competing countries are also hit by Trump Tariff so India will have a market with reduced margin.

Broader Observations

·         The tariffs appear punitive, discriminatory, and geo-politically motivated, rather than based on WTO rules.

·         Some high-growth sectors like textiles, chemicals, and electronics—where India has gained competitiveness—are being specifically targeted.

·         The exemptions (pharma, fuels, critical minerals) reflect US self-interest in securing supply chains.

·         Cancellation of the US trade delegation visit (25–29 August 2025) suggests continuing uncertainty.

 

[ABS News Service/20.08.2025]

To write or not to write on Impact of US tariffs on India is the question? This is because by the time the ink dries, the situation changes, we are living in an unstable equilibrium. It is governed not by economic or trade law considerations, but by geo-political considerations. So, let us see the possible impact of US tariffs on India based on trade and tariff data, without going into deeper involved analysis.

Some major imports of USA from India in 2024-25 (Table 1)are textiles items(12.32%),Gems and Jewellery items ( 11,53%),Pharmaceutical Products(11.31%),Electrical machinery and equipment and parts  including Electronics(18.38%)Nuclear Reactors, boilers,  machinery and mechanical appliances(covering pumps, fans, etc)(7.74%),Iron &steel items and Aluminium items (5.27%) ,Mineral fuels(4.86%), Chemicals organic & inorganic etc, (4.92%),Vehicles including  Autoparts (3.0%),Fish & crustaceans, etc (2.36%)

Table 1: Major US Imports from India at 2HS level and Trump's Tariffs

HS code

Commodity

Share in total US imports from India 2024-25

Growth in US imports from India 2024-25 over previous (%)

Estimated tariff rates

03

Fish and crustaceans, molluscs and other aquatic invertebrates.

2.36

7.3

~60%

04

Dairy produce; birds' eggs; natural honey; edible prod. Of animal origin, not elsewhere spec. Or included.

0.24

16.1

 ~81%

06

Live trees and other plants; bulbs; roots and the like; cut flowers and ornamental foliage.

0.02

8.8

~50%

07

Edible vegetables and certain roots and tubers.

0.17

23.2

~50%

08

Edible fruit and nuts; peel or citrus fruit or melons.

0.08

-14.4

~50%

09

Coffee, tea, mate and spices.

0.52

14.7

~50%

10

Cereals.

0.46

11.9

~50%

16

Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates

0.74

8.9

~50%

25

Salt; sulphur; earths and stone; plastering materials, lime and cement.

0.13

-12.8

0%

27

Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes.

4.86

-27.9

0%

28

Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, or radi. Elem. Or of isotopes.

0.46

24.2

~50%

29

Organic chemicals

3.07

10.4

~54%

30

Pharmaceutical products

11.31

21.1

0%

38

Miscellaneous chemical products.

1.39

-5.6

~50%

39

Plastic and articles thereof.

1.93

15.7

~50%

40

Rubber and articles thereof.

1.07

2.4

~50%

42

Articles of leather, saddlery and harness; travel goods, handbags and similar cont.articles of animal gut(othr thn silk-wrm)

0.90

14.6

~51–52%

50

Silk

0.01

2.3

~50%+

51

Wool, fine or coarse animal hair, horsehair yarn and woven fabric.

0.01

5.7

~59–64%

52

Cotton.

0.12

10.3

~59%

53

Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn.

0.11

20.8

~59–64%

54

Man-made filaments.

0.19

0.1

~59–64%

55

Man-made staple fibres.

0.20

10.6

~59–64%

56

Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof.

0.23

22.4

~59–64%

57

Carpets and other textile floor coverings.

1.42

13.0

~59–64%

58

Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery.

0.08

25.2

~59–64%

59

Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use.

0.28

12.9

~59–64%

60

Knitted or crocheted fabrics.

0.10

25.8

~59–64%

61

Articles of apparel and clothing accessories, knitted or crocheted.

3.07

20.0

~63.9%

62

Articles of apparel and clothing accessories, not knitted or crocheted.

3.09

6.8

~60.3%

63

Other madeup textile articles; sets; worn clothing and worn textile articles; rags

3.41

6.1

~59%

64

Footwear, gaiters and the like; parts of such articles.

0.53

17.8

~50–52%

68

Articles of stone, plaster, cement, asbestos, mica or similar materials.

1.10

10.3

~50%

69

Ceramic products.

0.29

-9.4

~50%

70

Glass and glassware.

0.40

8.0

~50%

71

Natural or cultured pearls,precious or semiprecious stones,pre.metals,clad with pre.metal and articles thereof;imit.jewlry;coin.

11.53

0.3

~52.1%

72

Iron and steel

0.68

23.5

~50%

73

Articles of iron or steel

3.60

11.5

~51.7%

76

Aluminium and articles thereof.

0.99

-9.1

~50–52%

84

Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof.

7.74

8.5

~50%

85

Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers,and parts.

18.38

43.5

~51.3%

87

Vehicles other than railway or tramway rolling stock, and parts and accessories thereof.

2.99

-2.2

~50%

88

Aircraft, spacecraft, and parts thereof.

0.53

-8.8

~25–26%

90

Optical, photographic cinematographic measuring, checking precision, medical or surgical inst. And apparatus parts and accessories thereof;

1.10

5.5

~50%

94

Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishing; lamps and lighting fittings not elsewhere specified or inc

1.33

4.2

~50%

Total value of imports in 2024-25 (in billion us dollars) and growth (%)

86.51

11.6

Source: Tariffs from different sources, Trade data from DOC, India

US tariffs (call it reciprocal, or unjust, or punitory or irrational tariffs) including all tariffs till August 27,2025 and also including antidumping and CVD for different items (Table 1) show that they have an impact on US imports from India for some important sectors. These include textiles (around 59 to 64% tariffs) which was affected earlier also when GSP was withdrawn, Gems and Jewellery (around 52.1%tariffs) automobiles, auto components, electrical machinery, etc (50 to51.3% tariffs), iron & steel and aluminium items (50 to 52%tariffs),chemicals (50 to 54%),leather and footwear (50 to 52%) and agricultural sector items like fish, shrimps ,etc (60%),dairy products(81%),Onions (50.54%) and spices (50%).Most of these items have also witnessed high export growth to the US  in 2024-25.

Some important sectors exempt from tariffs include pharmaceutical products (0%), mineral fuels (0%), critical minerals (0%) and electronics (0%). Thus, more than 20% of our major export items will not be affected by Trump tariffs.

However, it would be wise to arrive at any conclusions only after August 27 when the 25% additional tariffs will be implemented. Meanwhile, much water will flow through the Potomac River in Washington DC after the Trump -Putin dialogue. Already the US trade delegation supposed to arrive from 25 to 29th August has been cancelled and postponed to another date. So let us wait till the tamasha ends and some sort of stable equilibrium is attained. The US tariffs on competing countries should also be taken note of. Meanwhile India should continue its focus on Atmanirbhar Bharath and forging further ties with other countries.