As the April 2 deadline approaches for US President Donald Trump to impose reciprocal tariffs, there is uncertainty about their implementation. The US is moving towards negotiating a new trade agreement with India, and how these tariffs will affect Indian businesses largely depends on whether they are applied at the product, sector, or country level.
Between 2021-22 and 2023-24, the US was India’s largest trading partner, accounting for about 18% of India’s total goods exports, 6.22% in imports, and 10.73% in bilateral trade. India exports to the US across 30 sectors, including six in agriculture and 24 in industry. If sector-level tariffs are introduced, the following products will face notable impacts:
Alcohol, Wines, and Spirits: A hefty tariff increase of 122.10% will apply, although exports are valued at only $19.20 million.
Dairy Products: A 38.23% tariff differential will affect $181.49 million worth of trade, raising prices for items like ghee, butter, and milk powder, potentially reducing their market share.
Fish, Meat, and Processed Seafood: Exports valued at $2.58 billion will face a 27.83% tariff increase, making shrimp and other seafood less competitive.
Live Animals and Animal Products: A 27.75% tariff on $10.31 million in exports will significantly impact this sector.
Processed Food, Sugar, and Cocoa: Exports worth $1.03 billion will be hit by a 24.99% tariff hike, making Indian snacks and confectionery less affordable in the US market.
Footwear: The sector will face a tariff differential of 15.56%, increasing costs for Indian footwear exports.
Diamonds, Gold, and Silver: With $11.88 billion in exports, this sector will face a 13.32% tariff hike, driving up jewelry prices and potentially reducing competitiveness.
Industrial Goods: The pharmaceutical sector, worth billions in exports, will face a 10.90% tariff differential, raising the cost of generic medicines and specialty drugs.
Edible Oils: This sector will experience a 10.67% tariff increase, making oils like coconut and mustard more expensive in the US.
Ores, Minerals, Petroleum, and Garments: No new tariffs will be imposed in these sectors.
The looming uncertainty over the tariffs, based on their specific implementation, leaves businesses and stakeholders uncertain about the long-term impact on India’s exports to the US.
