India’s almost $87 billion exports to U.S. beneath menace as a consequence of Trump tariffs

India’s exports to the U.S. will invite a steep 50% tariff Wednesday, as U.S. President Donald Trump’s further 25% levies over New Delhi’s oil purchases from Russia take impact.

Analysts are warning that the upper U.S. tariffs danger considerably diminishing the attract of Indian exports to the U.S., in comparison with regional friends.

“India’s attractiveness as an rising manufacturing hub might be vastly undermined,” Shilan Shah, deputy chief rising markets economist at Capital Economics, mentioned in a word when the duties had been introduced. He estimates that the U.S. spending drives round 2% of India’s GDP and the additional 25% tariff is “giant sufficient to have a fabric affect.”

India counts the U.S. as its single largest export associate. Its complete items’ exports reached about $434 billion within the 12 months ended March 2025, and almost 20%, or $86.51 billion value of products had been shipped to the U.S., in keeping with the most recent official knowledge.

The ensuing drop in exports as a consequence of tariffs would imply the financial system grows by nearer to six% this 12 months and subsequent, relatively than the 7% development forecast previous to Trump’s announcement, Shah mentioned.

The potential 50% further tariff on Indian merchandise might put a drag of a complete 0.6 share level on its GDP, in keeping with Goldman Sachs’ estimates.

India’s main exports to the U.S. are engineering and digital items, medication and prescribed drugs, gems and jewellery, in keeping with the federal government knowledge.

With notable variance throughout industries and lack of readability over Trump’s plans with sector-specific tariffs, listed here are segments that probably stand to lose essentially the most based mostly on their publicity to the U.S. market:

Engineering items, together with merchandise like auto elements, energy tools and industrial equipment, have been India’s largest exports to the U.S. and globally, hitting almost $117 billion within the 12 months ended March.

Round 19.16 billion value of those industrial items, or about 16%, had been bought to the U.S. over that interval.

Exports of iron, metal, and different merchandise exports accounted for 17.07% of the whole engineering exports, whereas non-ferrous metals and merchandise exports contributed 10.52%. Metal exports already face 50% sectoral tariffs, worsening the outlook for the sector as the identical levy now looms giant on different engineering items.

India’s complete exports jumped 1.92% in June, partially pushed by the rise in engineering items, which rose 1.35% to $9.5 billion.

The gems and jewellery, and textiles and apparels sectors, are additionally anticipated to be considerably jolted by the sudden hike in U.S. tariffs.

The gems and jewellery sector contributes 7% of India’s GDP and employs about 5 million staff, in keeping with a July report by a state-backed trade physique.

About 33% of India’s gems and jewellery exports went to the U.S. in fiscal 12 months 2025.

Rajesh Mehta, government chairman of Indian jewellery maker Rajesh Exports, mentioned in an interview with CNBC earlier this month that increased tariffs might be an “further burden,” whereas calling for presidency help for the sector.

Textiles is among the many most labor-intensive sectors in India, immediately using about 45 million staff throughout the nation. Just like gems and jewellery, round 34% of textile exports went to the U.S. within the final fiscal 12 months.

“For sure, the brand new tariff fee goes to noticeably check the resolve and resilience of India’s textile and attire exporters as we is not going to take pleasure in a major obligation differential benefit vis-à-vis many different nations, besides Bangladesh, with whom we compete for a bigger share of the US market,” the Confederation of Indian textile trade mentioned in a assertion dated July 30, earlier than the most recent hike in duties was introduced.

India’s electronics sector relied on the U.S. for 38% of its exports final fiscal 12 months, making it “essentially the most uncovered” to potential dangers of the tariff exemptions being rolled again, in keeping with Alexandra Hermann, lead economist at Oxford Economics. Presently, a number of digital items are exempt from tariffs.

India overtook China to turn out to be the highest exporter of smartphones bought within the U.S. within the second quarter, after Apple accelerated to maneuver its meeting of extra iPhones to the South Asian nation.

In a serious, though momentary, reprieve for firms comparable to Apple, Trump in April introduced to exempt smartphones, computer systems and different digital items from tariffs.

India’s U.S.-bound exports of digital items have accelerated this 12 months, and its exports in March alone greater than doubled to $2.76 billion from a 12 months earlier.

Whereas the pharmaceutical sector can be at the moment exempt from tariffs, Trump has threatened duties on pharma exports to the U.S. In an interview to CNBC Trump mentioned he would initially impose a “small tariff” on pharma, after which increase that fee to as excessive as 250% in a number of years.

India’s pharma sector has a excessive dependency on U.S. consumers, with its medication and pharma exports to the U.S. reaching over $10.5 billion for the 12 months ended March 2025, accounting for almost 35% of the class’s complete shipments, in keeping with the official knowledge.

“[India’s] Chemical compounds total have considerably much less US publicity however this masks the excessive pharmaceutical sector’s US dependency therein,” mentioned Hermann, leaving the pharma sector extremely weak to Trump’s potential tariffs.

India additionally exported metal and aluminum to america, however commerce in these items is taxed by a separate government order.

“The U.S. might extra simply supply for provides from different import places, however it’s a lot more durable for India to diversify away from the U.S. throughout completely different sectors,” mentioned Michael Wan, senior economist at MUFG Financial institution.

India competes towards the likes of Europe in prescribed drugs; Vietnam and Mexico in electronics; Cambodia, Sri Lanka, Bangladesh and Vietnam in textiles; and Israel in gems and jewellery, in keeping with Wan. “If these tariff differentials stick, India’s export competitiveness will seemingly be eroded over time,” he mentioned.

Among the many export-reliant nations which have clinched preliminary offers with Trump, Vietnam noticed its tariffs lowered to twenty% from 46%. In his newest tariff adjustment, Trump additionally eased tariffs on Thailand to 19% from the “reciprocal” tariff degree of 36%, Bangladesh to twenty% from 35% and Cambodia to 19% from 36%.

Round 32% of India’s exports to the U.S. are at the moment exempt from tariffs, in keeping with MUFG’s estimates, together with electronics and pharmaceutical merchandise.

— CNBC’s Ayushi Jindal contributed to this story.