Trump’s 25% Blanket Tariff Without Exemptions Could Trigger 30% Drop In Indian Exports: GTRI

New Delhi, Aug 1 (KNN) The United States has announced a blanket 25 percent tariff on all Indian-origin goods, effective August 7, in a move that could significantly disrupt India’s exports to its largest trading partner, according to a new analysis by the Global Trade Research Initiative (GTRI). 

The decision, issued through an executive order by President Donald Trump titled ‘Further Modifying the Reciprocal Tariff Rates’, eliminates all product-level exemptions previously extended to India.

The order lists new tariff rates for nearly 70 countries, but India is among the few singled out for across-the-board duties, covering sectors that were earlier excluded from similar trade actions. 

These include pharmaceuticals, electronics, energy products, and semiconductors—categories where other countries such as China have retained exemptions. 

India will now face a uniform 25 percent ad valorem duty on all exports to the US, with no relief for critical or strategic goods.

“This is one of the most sweeping and punitive trade actions the US has taken against a key partner in recent years,” said Ajay Srivastava, Founder of GTRI. “Unlike other countries, India has been denied exemptions even for sensitive sectors such as active pharmaceutical ingredients (APIs), finished drugs, electronics, and energy products. The message is clear: align with US geopolitical positions or face blanket tariffs.”

The order does allow for the possibility of tariff reductions—conditional upon the signing of trade agreements aligned with US priorities. 

However, in the absence of such a deal, Indian exporters will be subject to the full 25 percent tariff starting August 7. 

Goods already in transit will continue to be taxed at earlier rates—typically around 10 percent—until October 5, 2025, except for categories like steel and aluminium, which already face tariffs of 50 percent.

GTRI warns that the tariff decision could lead to a sharp contraction in India’s exports to the US, which stood at USD 86.5 billion in FY2025. 

Preliminary estimates suggest a potential 30 percent decline in FY2026, bringing shipments down to USD 60.6 billion. 

High-impact sectors include petroleum products (USD 4.1 billion), smartphones (USD 10.9 billion), and pharmaceuticals (USD 9.8 billion)—all of which rely heavily on imported components and have low domestic value addition.

In addition to India, other countries facing high reciprocal tariffs include Brunei, Kazakhstan, Moldova, and Tunisia, with rates in the range of 25–30 percent. 

Export competitors such as Bangladesh, Sri Lanka, Taiwan, and Vietnam will face a lower 20 percent duty, adding a further layer of disadvantage for Indian exporters.

The new tariffs, which are to be imposed over and above standard Most Favoured Nation (MFN) rates, raise overall duties substantially, making Indian goods less competitive in the US market. 

(KNN Bureau)