New Delhi Taking Steps to Counter US tariff impact India

US tariff impact India -With an August 1 deadline approaching, the Indian government is assessing the implications of a 25% tariff announced by US President Donald Trump on all goods imported from India, a move that includes an additional, unspecified “penalty” for India’s defense and energy trade with Russia. The announcement has sent ripples through India’s economy, raising concerns about the future of the $129.2 billion trade relationship between the two nations.

Indian Government Strategy: Negotiation and Assessment

India Response to US Tariffs -In its official response, India’s Commerce and Industry Ministry stated it has “taken note” of President Trump’s announcement and is “studying its implications”. The government reiterated its commitment to finalizing a “fair, balanced and mutually beneficial” trade agreement and affirmed it would take all necessary steps to safeguard the country’s national interests, particularly the welfare of its farmers and entrepreneurs.

Despite the aggressive tariff announcement, diplomatic channels remain open. A US trade delegation is scheduled to visit India on August 25 for the next round of negotiations over the proposed bilateral trade agreement. This has led analysts to believe the 25% tariff may be a temporary negotiating tactic by the Trump administration to pressure India into a more favorable deal for the US. Some experts suggest the final tariff rate could settle in the 15-20% range as part of a comprehensive trade pact.

However, the move has drawn sharp criticism from opposition parties in India, who have described the situation as a diplomatic failure for the current administration5.

Sectors Facing the Greatest Risk

Economists have cautioned that the steep tariffs could impede India’s manufacturing goals and potentially slow economic growth by up to 0.5 percentage points. The impact is expected to be most severe in labor-intensive, export-oriented sectors with significant exposure to the US market.

• Gems and Jewellery: The US accounts for over $10 billion of India’s gem and jewellery exports. Trade groups have expressed deep concern, warning that a blanket tariff could disrupt supply chains, inflate costs, and threaten thousands of jobs.

• Textiles and Apparel: Indian textile and apparel manufacturers are key suppliers to major American retailers. The Confederation of Indian Textile Industry stated the tariff poses a “stiff challenge” that will “seriously test the resolve and resilience” of exporters.

• Electronics: This sector faces significant risk, especially as India has recently overtaken China as the top source for smartphones imported by the US, largely due to Apple increasing its iPhone assembly in the country.

• Pharmaceuticals and Auto Components: The pharmaceutical sector, a major exporter of generic drugs to the US, is considered vulnerable. Likewise, auto component makers with high export volumes to North America may be affected by a slowdown in demand or supply chain disruptions.

Related Article –India US tariff latest : Economic Impact Explained By Trump’s 25% Threat

Frequently Asked Questions (FAQs)

What are the new US tariffs on India?
The US has announced a 25% tariff on all goods imported from India, which will take effect on August 1, 2025. President Trump also included an unspecified “penalty” related to India’s energy and military purchases from Russia.

How is the Indian government preparing for these tariffs?
The government is currently analyzing the potential impact of the tariffs while publicly stating its commitment to continuing negotiations for a fair trade deal. It has vowed to take all necessary measures to protect India’s national interests .

Which Indian industries will be most affected?
The sectors expected to be hit hardest are those with high export volumes to the US, including gems and jewellery, textiles and apparel, electronics, pharmaceuticals, and auto components.

Are trade negotiations between the US and India still ongoing?
Yes. A US delegation is scheduled to arrive in India on August 25 for the next round of trade talks, indicating that dialogue between the two countries is continuing.