Trump’s tariffs: These Indian sectors may be worst hit but experts spot ‘gains’ too

For India, which is a significant trading partner of the US, Trump announced 26 per cent 'kinder' reciprocal tariffs. Training guns against India, and citing examples of tariff difference, Trump said the US imposes a 2.5 per cent tariff on passenger vehicle imports (with internal combustion engines), while India imposes 70 per cent.

"For network switches and routers, the United States imposes a 0 per cent tariff, but for similar products, India levies a higher rate of 10 per cent. Similarly, for rice in the husk, the US MFN tariff is 2.7 per cent, but India’s rate is 50 per cent," he added.

India charges us 52 per cent, so we will charge them half of that - 26 per cent, he said. Even as Indian analysts scramble to figure out the extent of the impact of the new tariffs, some key elements are emerging.

Also read: On 'liberation day', Trump announces sweeping new tariffs; India gets 26 pc

Exports to be hit

As India exports tonnes of goods to the United States, exporters are the ones to be hit the most with these tariffs. Most of the sectors who are exporting to the US will be hit with a blanket reciprocal tariff of 26 per cent.

India’s primary exports to the US include pharmaceuticals, telecom equipment, gemstones, petroleum products, gold jewellery, and ready-made cotton garments.

They also expert meat, fish, and seafood; processed food, sugar, and cocoa; cereals, vegetables, fruits, and spices; dairy products; edible oils; electrical goods, and electronics; chemicals (excluding pharma); rubber products, including tyres and belts; ceramic, glass, and stone products; footwear; and automobile and auto components to the US.

India's exports to the US span 30 sectors, with six in agriculture and 24 in industry.

At first glance, which sectors are most likely to be affected?

Gems and Jewellery

According to experts, gems and jewellery sector exporters are expected to be hit the hardest by the tariffs. $9 billion worth of gems and jewellery from India are exported to the US.

The sector will attract a 13.32 per cent tariff hike, raising jewellery prices and reducing competitiveness. Prior to this hike, Washington's tariffs on jewellery and gem products faced duties of around just 2.12 per cent.

Agriculture: Seafood, meat and sugar

According to an analysis of the think tank Global Trade Research Initiative (GTRI), the hardest-hit sector in agriculture would be fish, meat, and processed seafood products. These products, which saw a $2.58 billion worth of exports in 2024, faces a 27.83 per cent tariff differential.

The US is a major destination for Indian shrimp and other seafood products. Tariffs could increase prices, making Indian seafood less competitive compared to products from other exporting nations.

Also read: Why is Trump calling April 2 ‘Liberation Day’? What does he want that day?

Food and beverages sector

Processed food, sugar and cocoa: Exports worth $1.03 billion will also struggle with a 24.99 per cent tariff increase, making Indian snacks and confectionery expensive in the US.

Alcohol, wines, and spirits: The highest tariff hike at 122.10 per cent will come into effect, though exports are only $19.20 million

Dairy products: Trade worth $181.49 million will be severely affected by a 38.23 per cent tariff differential, making ghee, butter, and milk powder costlier, reducing their market share.

Live animals and animal products face a 27.75 per cent tariff differential on US$ 10.31 million in exports.

Footwear

The footwear industry, with exports worth $457.66 million to the US, faces a tariff gap of 15.56 per cent.

This substantial tariff could make Indian footwear significantly more expensive in the US market impacting Indian manufacturers and exporters.

Textiles

The textile and apparel industry of India stands as one of the most vulnerable sectors to the new US tariffs.

In FY 2023-34, India exported approximately $9.6 billion worth of textiles and apparel to the US, accounting for 28 per cent of its total exports in this category.

However, The Global Trade Research Initiative (GTRI) said that the USA's protectionist tariff regime could act as a catalyst for India to gain from global supply chain realignments. For example, the imposition of higher reciprocal tariffs by the US on several Asian countries, including China, Vietnam, Taiwan, Thailand, and Bangladesh, presents an opportunity for India to strengthen its position in global trade and manufacturing.

However, gains will not accrue automatically, and India needs deep reforms for enabling scale production, domestic value addition and improving competitiveness to benefit, GTRI Founder Ajay Srivastava told PTI.

With the US setting a relatively lower reciprocal tariff rate of 27 per cent on Indian goods, compared to 54 per cent on China, 46 per cent on Vietnam, 37 per cent on Bangladesh, and 36 per cent on Thailand, "India gains a natural competitive advantage in several key sectors," he added.

He said that one of the most prominent areas of opportunity lies in textiles and garments as the high tariffs on Chinese and Bangladeshi exports create room for Indian textile manufacturers to gain market share, attract relocated production, and increase exports to the US.

India's strong base in textile production, coupled with lower tariffs, could drive greater global demand and new investments in the sector.

Electronics

With India exporting nearly $14 billion worth of electronics products, this sector is one of the key sectors expected to be hit, said experts. Earlier American tariffs on electronic goods averaged just 0.41 per cent.

However, like in textiles, experts see a possible opportunity in these tariffs.

In the electronics, telecom, and smartphone sectors, countries like Vietnam and Thailand are likely to lose cost competitiveness due to the steep US tariffs, and this opens a window for India, which has already begun investing in electronics manufacturing through government incentives like the Production-Linked Incentive (PLI) scheme.

"The semiconductor space, while still dominated by technologically advanced players like Taiwan, also offers potential for India to capture parts of the value chain such as packaging, testing, and lower-end chip manufacturing," said GRTI.

Even a partial shift of supply chains from Taiwan due to tariffs (32 per cent) could benefit India if supported by adequate infrastructure and policy support.

Similarly, sectors like machinery, automobiles, and toys, where China and Thailand currently lead, are also vulnerable to tariff-related relocation.

Also read: Trump tariff cuts: World waits in fear; India quickly finalises terms for US trade deal

Auto industry

While the 26 per cent tariff will not apply to auto parts and aluminium products, those will still attract the 25% tariff that Trump had announced earlier.

Sectors exempt from Trump tariffs

Essential and strategic items such as pharmaceuticals, semiconductors, copper, and energy products like oil, gas, coal and LNG are exempted from the 27 per cent import duty announced by the US.

The US administration exempted pharmaceuticals from reciprocal tariffs, underscoring the critical role played by generic medicines globally, Indian Pharmaceutical Alliance (IPA) Secretary General Sudarshan Jain told PTI.

The decision underscores the critical role of cost-effective, life-saving generic medicines in public health, economic stability, and national security, Jain added. Further, he said, India and the US share a strong and growing bilateral trade relationship, with a shared vision to double trade to US$ 500 billion under the Mission 500 initiative and pharmaceuticals remain a cornerstone of this partnership, as India plays a vital role in global and US healthcare by ensuring a steady supply of affordable medicines.

Products exempt from import tariff in the US include:

Copper, pharmaceuticals, semiconductors, and lumber

Bullion: Precious metals like gold and silver are exempt.

Energy and minerals: Certain energy products and minerals that aren’t available in the US will also be excluded.

Mixed bag, not a setback

The ministry of commerce on Thursday said that while they were still analysing the impact of the tariffs, it was a "mixed bag and not a setback for India," reported news agency PTI.

The Federation of Indian Export Organisations (FIEO) reiterated the sentiment, adding that India is in a better position than many other trading partners. FIEO Director General and CEO Ajay Sahai told news agency PTI, "We have to assess the impact, but looking at the reciprocal tariffs imposed on other countries, we are in a lower band."

Other Asian economies have been hit even harder, with China’s overall export tariff to the US standing at 34 per cent, Japan at 24 per cent, Thailand at 36 per cent, Malaysia at 24 per cent, Taiwan at 32 per cent, and South Korea at 25 per cent. Vietnam has been hit the hardest with a 46 per cent tariff.

These higher tariff rates could create new trade opportunities for Indian exporters.