Indian exporters are preparing for major losses after the United States confirmed steep new tariffs on a wide range of goods from Wednesday.
The move follows collapsed trade talks and Washington’s decision to penalise India for boosting imports of Russian oil.
The new 25% duty, announced by President Donald Trump and confirmed by the Homeland Security Department, takes total tariffs to as much as 50%—one of the highest levels imposed by Washington in recent years.
Export groups warn that the tariffs could impact over half of India’s exports to the US, worth $87 billion, said a Reuters report, while competitors in Bangladesh, China, and Vietnam could gain market share.
Tariffs take effect from Wednesday
The new tariffs will apply from 12:01 a.m. EDT on Wednesday (9:31 a.m. IST). Exemptions include humanitarian aid, reciprocal trade programme items, and shipments already in transit.
Washington has linked the action to India’s increased oil purchases from Russia, which now account for 42% of its imports compared with less than 1% before the Ukraine war.
US Treasury Secretary Scott Bessent accused India of “profiteering” from Russian oil, while White House trade adviser Peter Navarro echoed concerns that such imports indirectly support Russia’s war.
Five rounds of trade talks had failed before the announcement, with Indian negotiators pushing for tariffs capped at 15%. Officials from both sides blamed political misjudgments for the breakdown in discussions.
India’s commerce ministry confirmed that exporters will be given financial support, including subsidies on bank loans, and be encouraged to explore alternative markets in China, Latin America, and the Middle East.
Nearly 50 countries have been identified for expanding shipments of textiles, leather goods, marine products, and processed foods.
Exporters and industries under pressure
Exporter groups estimate that as much as 55% of India’s goods sent to the US are affected by the tariff hikes.
The Engineering Exports Promotion Council warned that orders from American buyers had already stopped, and predicted that exports could fall 20% to 30% from September.
India’s diamond industry faces a particularly sharp challenge. Already weakened by falling Chinese demand, the sector risks losing nearly one-third of its $28.5 billion annual shipments to its largest market.
The government has pledged relief to struggling exporters, but industry groups argue that domestic sales and diversification options remain limited.
Some analysts expect Bangladesh, Vietnam, and China to capture much of India’s lost export share.
Economic and financial market impact
Markets reacted quickly to the announcement. The Indian rupee closed at a three-week low of 87.68 against the dollar, even after suspected central bank intervention.
Benchmark equity indexes NSE Nifty 50 and BSE Sensex each fell 1% in their worst performance in three months.
Private sector economists warn that prolonged tariffs could cut India’s economic growth by 0.8 percentage points this year and next, leading to the steepest earnings downgrades in Asia.
Capital Economics issued the projection last week, suggesting that while domestic tax cuts may cushion some impact, corporate profits are set to face pressure.
Political and diplomatic responses
India has not issued restrictions on Russian oil purchases and continues to allow companies to make decisions based on economic feasibility.
Foreign Minister S. Jaishankar highlighted that US criticism is not equally directed at other major buyers like China and the European Union.
The US embassy in New Delhi said America remains committed to collaborating with India on high-quality products and energy exports to strengthen energy security and growth.
Meanwhile, Prime Minister Narendra Modi stressed that India will not compromise the interests of its farmers despite trade tensions.
He is also expected to travel to China later this month, marking his first visit there in seven years, as India seeks to balance its trade relations amid growing uncertainty.
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