Indian exporters may soon face a rough patch as former US President Donald Trump’s push for “reciprocal tariffs” spells higher costs for goods headed to American shores. Trump has proposed a steep 27% adjusted tariff on Indian products – a figure that adds on top of existing duties. Currently, Indian exports to the US attract about 2.7% in tariffs, while American goods face a 10.5% duty in India, according to a Barclays report.
Unless India chooses to strike back – which the government hasn’t indicated so far – Indian goods will face a heavier tax load in the US than the reverse. That’s worrying, as the US is India’s largest export destination and helps balance its overall trade deficit.
But how much damage this will actually do depends on two shifting variables. First, Trump’s tariffs aren’t India-specific — other trade partners face them too. So, India’s edge in the US market may only shrink if competitors are less affected. Second, the fallout will differ by sector. Ernst & Young predicts Indian energy exports might take a hit, textile exports could gain a foothold, and pharma products may remain unaffected.
Still, there’s room for optimism. With trade talks ongoing and a prior understanding from PM Modi’s February visit, a broader deal could emerge. Beyond tariffs, India’s export health will hinge on the US economy’s trajectory and how the rupee fares against the dollar.
For now, India hopes for a fair compromise – though it might come at the cost of lowering barriers for American goods or committing to US imports over cheaper global alternatives.
