US Tariffs on Imports from India: Irrational or Punitory?
By
Dr H A C Prasad, Former Senior Economic Adviser, MOF, GOI
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 could have changed as we are living in an unstable equilibrium, 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 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%)
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 These include textiles (around 59 to 64% tariffs) which was affected earlier also when GSP was withdrawn, Gems and Jewellery (around 52.1%tariffs) automobiles, auto components, electrical machinery, etc (50 to51.3% tariffs), iron & steel and aluminium items (50 to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.
