Indian goods to face 50% tariff in US from Aug 27; exports of $48 billion to be hit

The United States has issued a draft notice detailing plans to implement an additional 25% tariff on Indian products from August 27, impacting more than $48 billion worth of India's exports to the US.

The total tariff on Indian goods entering the US market, with certain exceptions, will now be 50%. The US imposed a 25% tariff on India on August 7 and announced another 25% 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order published on Monday, said the increased levies would hit Indian products that are “entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 am Eastern Daylight Time on August 27, 2025”.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 and footwear, animal products, chemicals, and electrical and 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% tariff if they were already loaded on a ship and in transit to the US before 12:01 am (EDT) on August 27, 2025, provided they are cleared for use in the country or taken out of a warehouse for consumption before 12:01 am (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 that is facing a 50% import duty.

According to the Commerce Ministry, 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% US tariff), Thailand and Cambodia (both 36%), Bangladesh (35%), Indonesia (32%), China and Sri Lanka (both 30%), Malaysia (25%), the Philippines and Vietnam (both 20%).

The US has been the largest trading partner of India since 2021-22. In 2024-25, the bilateral trade in goods stood at $131.8 billion ($86.5 billion exports and $45.3 billion imports). According to the US data, India's exports were $91.2 billion in 2024.

*Textiles, gems & jewellery and shrimp exports among the worst affected from 50 pc tariff

According to think tank GTRI, 66% of India's exports ($60.2 billion), including those from key labour-intensive sectors such as apparel, textiles, gems and jewellery, shrimp, carpets, and furniture, will be subject to the 50% tariff, severely impacting their competitiveness and threatening market share in the US market.

About 3.8% of exports ($3.4 billion), primarily auto components, will also face a 25% tariff.

However, 30.2% of exports ($27.6 billion) will continue to enter the US market duty-free.

Shrimp exports of $2.4 billion (Visakhapatnam farms at risk); diamonds and jewellery exports of $10 billion (threatening Surat and Mumbai jobs); and textiles and apparel exports of $10.8 billion (Tirupur, NCR, Bengaluru under pressure), will be impacted by higher tariffs, according to GTRI analysis.

Similarly, carpets ($1.2 billion) and handicrafts ($1.6 billion) will be impacted as Turkey and Vietnam gain the US market. Agrifood ($6 billion), including basmati, spices and tea, will hit, benefitting Pakistan and Thailand. Steel, aluminium, copper ($4.7 billion); organic chemicals ($2.7 billion); and machinery ($6.7 billion) will also be hit.

*‘Prohibitive’ duty to drive out a number of Indian goods from the US market, fearing exporters

According to exporters, this "prohibitive" duty will drive out a number of Indian goods from the US market, as major competing countries like Bangladesh, Vietnam, Sri Lanka, Cambodia, and Indonesia have much lower duties on their goods.

A leather and footwear industry official said companies would now be compelled to reduce staff and halt production until there is clarity on the proposed bilateral trade agreement (BTA) between the two countries. The industry was looking to double the bilateral trade in goods and services to $500 billion from the current $191 billion.

A gems and jewellery exporter also said that "job cuts will happen for sure in the jewellery and diamond sectors as the US is our largest market”.

"We need a long-term export strategy to deal with these high tariffs. We need interest subsidy, ease of doing business, timely refund of GST dues and reformed special economic zone law," the exporter said.

Mithileshwar Thakur, Secretary General, AEPC (Apparel Export Promotion Council), said the textiles sector, with exports of $10.3 billion, is one of the worst-impacted sectors.

"The additional burden of another 25%... has effectively driven the Indian apparel industry out of the US market as the gap of 30-31% tariff disadvantage vis-a-vis major competing countries like Bangladesh, Vietnam, Sri Lanka, Cambodia and Indonesia is well-nigh impossible to bridge," he said.

"The move will severely disrupt the flow of Indian goods to its largest export market," FIEO President S C Ralhan said.

GTRI Founder Ajay Srivastava said India's exports to the US are expected to decline steeply to about $49.6 billion in FY2026 due to Washington's new tariff regime.