India Holds Firm as U.S. Tariffs Loom, How Much Damage Will Trump’s Duties Really Do?

The U.S. decision to impose a 25% tariff on Indian goods is making headlines, but according to Indian officials, the real impact may be far smaller than it appears. Sources told PTI that India’s key exports to the U.S. are largely protected under exemption clauses, and only a limited volume—about \$48 billion worth of goods—will be affected by the new duties.

A significant share of India’s exports to the U.S., such as pharmaceuticals and electronics, already fall under Section 232 exemptions. As a result, more than half of Indian shipments to the U.S. are expected to remain untouched by the new tariffs.

What the Tariff Impact Looks Like in Numbers

India’s trade with the U.S. stood at \$131.8 billion in FY 2024–25, with \$86.5 billion in exports and \$45.3 billion in imports. Sources estimate that of the total, only around \$48 billion worth of Indian exports could see tariff implications.

Here’s a breakdown of sectors that will face the 25% tariff:

• Electrical & Mechanical Machinery – approx. \$9 billion
• Gems & Jewellery – approx. \$12 billion
• Textiles and Apparel – approx. \$10.3 billion
• Shrimp Exports – approx. \$2.24 billion
• Leather & Footwear – approx. \$1.18 billion
• Animal Products – approx. \$2 billion
• Chemicals – approx. \$2.34 billion

Despite these figures, Indian officials argue that for a \$4 trillion economy with a population of over 1.4 billion, the tariff impact will be economically manageable.

India Stands Firm on Agri, Dairy, and GM Products

While the tariffs grab headlines, it’s the ongoing trade negotiations that hold greater significance. At the heart of India’s resistance lies a firm refusal to grant duty exemptions for agricultural, dairy, and genetically modified (GM) products.

Officials emphasized that dairy remains a non-negotiable due to religious sensitivities and cultural values associated with livestock and animal feed in India. “There will be no compromise on these segments in any of India’s trade pacts,” one source stated.

This uncompromising stance continues to be a major roadblock in trade talks with the U.S.

Trade Talks Ongoing: Sixth Round Set for August 25

Negotiations between New Delhi and Washington began in March 2025, and five rounds of discussions have already taken place. The sixth round is now confirmed for August 25, when a U.S. delegation is expected to arrive in India.

Sources say the talks will focus heavily on agricultural and digital trade, with India aiming to safeguard its domestic sectors while promoting broader market access.

Trump’s Tariff Tactic Seen as Pressure Strategy

The 25% tariff announcement is being widely viewed by trade experts as a negotiating tool. U.S. President Donald Trump, known for his aggressive trade policies, is reportedly “frustrated” with India’s stand on certain trade issues, especially its refusal to allow U.S. dairy and GM products.

Additionally, Trump expressed discontent over India’s continued purchase of Russian oil and arms, describing both India and Russia as “dead economies” in a recent post on Truth Social, his preferred social media platform.

“I don’t care what India does with Russia. They can take their dead economies down together,” Trump wrote, adding that the U.S. has “done very little business with India” due to high tariffs imposed by New Delhi.

India’s Response: National Interests Take Priority

In Parliament, Commerce Minister Piyush Goyal responded assertively to the U.S. move. He stressed that India will not compromise its national interest, no matter the pressure.

He reminded lawmakers that India is currently the world’s fastest-growing major economy and has risen from being the 11th largest economy to one of the top 5 globally.

“Our progress is the result of strong reforms and the hard work of farmers, MSMEs, and entrepreneurs,” Goyal said. He added that India is expected to become the third-largest economy in the near future, and will pursue trade deals that reflect its sovereign priorities.

U.S. Tariffs and Russian Oil: A Compounding Issue

Another sore point is India’s purchase of Russian crude oil, which continues despite U.S. disapproval. Trump’s administration has hinted at further penalties for India’s trade ties with Russia, though no formal measures have been announced yet.

While the U.S. previously granted waivers for India’s energy imports, this latest stance indicates that future cooperation may be under strain, unless compromises are reached.

India Sees Trade Pressure, Not Crisis

Despite the escalating rhetoric, Indian economic planners do not foresee a major crisis. Officials maintain that:

• The tariffs will affect only a portion of total exports
• Most critical sectors are already part of existing exemptions
• No compromise will be made on sectors tied to national or cultural identity
• Diversification of export markets is already underway to reduce U.S. dependence

What to Expect from the August Trade Talks

The upcoming trade dialogue is likely to center on:

• Market access for agricultural goods
• Digital trade frameworks
• E-commerce and cross-border data flow
• Dispute resolution mechanisms

Given the recent tensions, the tone of the talks will likely shift from cooperation to assertive bargaining. Yet, both sides are expected to pursue a middle ground to maintain the momentum of growing bilateral trade.

FAQs on U.S. Tariffs and India’s Trade Stance

Q1. Will the 25% U.S. tariff impact all Indian exports?
No. Only about \$48 billion worth of exports may be affected. Over half of India’s exports to the U.S. are exempt from these duties.

Q2. What sectors are most at risk under the new tariffs?
Key sectors include textiles, machinery, footwear, gems & jewellery, and shrimp exports.

Q3. Why won’t India allow U.S. dairy imports in trade deals?
Due to religious beliefs and cultural concerns around animal feed practices, India has consistently refused duty concessions in dairy across all trade agreements.

Q4. When is the next India-U.S. trade talk scheduled?
The sixth round of trade discussions is set for August 25, 2025, when a U.S. delegation will visit New Delhi.

Q5. Is the 25% tariff permanent?
As of now, it is an announced measure by the Trump administration, and its long-term status will depend on the outcome of ongoing trade talks and diplomatic negotiations.