Indian exports will suffer a loss of nearly $48 billion as the US formally notifies the imposition of 50 per cent tariff on Indian products from Wednesday.
Washington issued a draft notice detailing plans to implement the new regime of tariffs. The total tariff on Indian goods entering the US market, with certain exceptions, will now be 50 per cent. The US imposed a 25 per cent tariff on India on August 7 and announced another 25 per cent duties from August 27 as a penalty for buying Russian crude oil and military equipment.
The US Department of Homeland Security, in the draft order published on Monday, said the increased levies would hit Indian products that “entered for consumption, or [are] withdrawn from warehouse for consumption, on or after 12.01 am Eastern Daylight Time (EDT) on August 27, 2025”.
The sectors, which would bear the brunt of the high US import duties, include textiles, clothing, gems and jewellery, shrimp, leather, footwear, animal products, chemicals and electrical, mechanical machinery. Sectors such as pharma, energy products and electronic goods are out of the ambit of these sweeping duties.
The US draft order further stated that Indian products will be exempt from the new 50 per cent tariff if they were already loaded on a ship and are in transit to the US before 12.01am (EDT) on August 27, 2025, provided they are cleared for use in the country or taken out of a warehouse for consumption before 12.01am (EDT) on September 17, 2025, and the importer certifies this to US Customs by declaring a special code. Besides India, Brazil is the only US trading partner which is facing a 50 per cent import duty.
According to the Ministry of Commerce and Industry, around $48.2 billion of India’s merchandise exports (based on 2024 trade value) to the US will be subject to additional tariffs.
White House Press Secretary Karoline Leavitt, earlier this month, said US President Donald Trump imposed sanctions on India to bring an end to the conflict between Russia and Ukraine. US Treasury Secretary Scott Bessent has accused India of
profiteering by reselling Russian oil. On August 6, India stated that the US action was “unfair, unjustified and unreasonable”.
After the new levy, India’s competitors will be better placed in the US market due to lower duties. India’s competitors include Myanmar (40 per cent US tariff), Thailand and Cambodia (both 36 per cent), Bangladesh (35 per cent), Indonesia (32 per cent), China and Sri Lanka (both 30 per cent), Malaysia (25 per cent), Philippines and Vietnam (both 20 per cent).
In its notification, the US Customs and Border Protection (CBP) said the implementation of additional duties comes after US President Trump determined that the “Russian Federation’s actions continue to pose an unusual and extraordinary threat to US national security and foreign policy, and India is directly or indirectly importing Russian Federation oil”.
According to a report by the Global Trade Research Initiative (GTRI), tariffs will hit Indian exports worth $60.2 billion. Sectors that are labour-intensive and together employ millions of workers, such as textiles, gems and jewellery, shrimp, carpets, and furniture, will be most affected.
The GTRI estimates exports in these areas could shrink by as much as 70 per cent. The organisation said the new duties cover around 66 per cent of India’s total exports to the US, worth $86.5 billion in FY2025. If the tariffs remain in place, exports may fall to $49.6 billion in FY2026. Alternative suppliers like China, Vietnam and Mexico are likely to fill the gap in the US market.
The US is India’s biggest buyer of textiles. India is currently the third largest exporter of textiles to the country, holding a 9 per cent share, compared to China at 25 per cent and Vietnam at 12 per cent. Over the past five years, India’s share has risen steadily from 6 per cent to 9 per cent, while China’s share has dropped from 38 per cent to 25 per cent. This growth could now come under strain as higher tariffs make Indian goods more expensive for US buyers.
The GTRI analysis indicates that whilst 30 per cent of exports ($27.6 billion) will remain duty-free and 4 per cent ($3.4 billion) in auto parts will attract a 25 per cent tariff, a significant 66 per cent ($60.2 billion) comprising apparel, textiles, gems and jewellery, shrimp, carpets, and furniture will face a 50 per cent tariff.
This substantial tariff is expected to reduce competitiveness, potentially causing a 70 per cent reduction in these sectors to $18.6 billion, resulting in an overall 43 per cent decline in US-bound exports and significant job losses.
This development poses a critical challenge to India’s established position in US labour-intensive markets, threatening substantial unemployment in export-focused regions and potentially diminishing India’s role in global supply chains.