The United States has brought in a major increase in import tariffs, and India is among the countries facing the harshest treatment. The new measures, announced in early August 2025, are part of a wider trade action that raises duties on imports from dozens of nations. For India, the blow is even sharper because Washington has linked the tariffs to New Delhi’s continued purchase of Russian oil. This means Indian goods now face duties that can reach around 50% in many categories, on top of existing tariffs.
In 2024, goods trade between India and the U.S. touched nearly 129 billion dollars, with Indian exports to America making up more than two-thirds of that figure. These high numbers show how deeply the two countries’ economies are connected. The new tariffs are therefore not just a political move—they have the potential to affect entire supply chains and industries in India.
The U.S. government says the new tariffs are needed to protect its domestic industries and to penalise countries that maintain strong energy ties with Russia. In India’s case, the trigger was the steady flow of Russian crude oil into its refineries. The action builds on earlier measures: India’s duty-free export benefits under the U.S. Generalized System of Preferences were withdrawn in 2019, and they have not been restored. Without that cushion, the latest tariff layer lands directly on top of existing duties.
The gems and jewellery industry is expected to be the worst hit. The United States is the single largest market for India’s finished jewellery and cut-and-polished diamonds, taking in nearly a third of total exports from this sector. Manufacturing hubs in Surat and Mumbai depend heavily on American buyers, and with a 50% tariff, Indian products could quickly lose out to rivals in countries like Turkey, Thailand, and Vietnam.
Industry bodies warn that job losses could follow, especially because the sector employs a large number of skilled and semi-skilled workers. Given its thin profit margins and high labour intensity, even a small fall in orders can cause significant disruption.
India’s textile and garment industry is another large exporter to the U.S., with cities like Tiruppur known worldwide for knitwear. The sector works on tight margins and cannot easily absorb such steep tariff hikes. Exporters fear that orders will be delayed or shifted to other countries with lower tariffs, putting thousands of small and medium-sized enterprises under strain.
Because the U.S. is such a big market for Indian apparel, the industry will find it hard to replace lost orders quickly. Even if new markets are found, they may not match the scale or profitability of American contracts.
India is the world’s largest exporter of shrimp, and the U.S. is by far its biggest buyer. Coastal states like Andhra Pradesh and Odisha depend heavily on shrimp farming for income and employment. Farmers in these areas are already reporting a drop in farm-gate prices as buyers react to the news of higher tariffs.
The shrimp sector was already facing anti-dumping and countervailing duties in the U.S., and this new tariff layer makes Indian products among the most expensive in the market. Competing countries such as Ecuador and Vietnam stand to gain, as American buyers look for cheaper sources.
India exports a wide range of auto components, from engine parts to brake systems, to carmakers and the aftermarket in the United States. Nearly half of all Indian auto component exports go to North America, making the sector highly exposed to tariff changes.
The industry has been performing well in recent years and had just started building a trade surplus. However, the new duties threaten to squeeze margins, especially for suppliers to American original equipment manufacturers who operate under long-term contracts.
The chemicals sector is large and varied. India ships billions of dollars’ worth of organic chemicals, specialty chemicals, and petrochemical products to the U.S. Bulk chemical exporters may find it difficult to pass on the extra cost to customers, while specialty chemical makers could fare slightly better due to the specialised nature of their products.
The final impact will depend on how much flexibility buyers have in shifting orders to other countries and how essential Indian products are to their supply chains.
Not every industry is equally exposed to the tariff hike. Pharmaceuticals and certain electronics categories are understood to have been spared from the steepest duties, at least for now. The U.S. relies heavily on Indian generic medicines and active pharmaceutical ingredients, so keeping these affordable is in its own interest. Similarly, some electronics, such as smartphones and computers, are seen as important for keeping consumer prices stable in the U.S.
However, these exemptions can change quickly depending on political and economic developments. Companies in these sectors are being advised to remain cautious.
The stock market reaction in India has been mixed. While overall indexes held steady, shares of companies heavily dependent on U.S. exports—especially in jewellery, apparel, and seafood—saw sharper declines. Credit rating agencies and economists warn that if the tariffs remain in place for long, they could slow down India’s manufacturing growth and delay investment plans.
For the U.S., higher tariffs could mean higher prices for consumers. This could eventually hurt demand for Indian products indirectly, even in categories that have not been directly targeted.
Industry groups in India are calling for government support to help exporters weather the storm. Proposals include temporary tax relief, cheaper loans, and faster export credit approvals. The idea is to give companies breathing space while they find new buyers or renegotiate contracts.
Diplomatic efforts could also help. Some trade analysts believe there is still a chance for a limited deal between the U.S. and India that could lower tariffs on certain goods, even if the broader trade tensions remain. At the same time, exporters are being urged to diversify into other markets such as Europe, Latin America, and the Middle East to reduce dependence on the U.S.
The hardest-hit sectors are likely to be gems and jewellery, textiles and apparel, and shrimp and seafood—industries that depend heavily on the U.S. market and operate on slim profit margins. Auto components and chemicals will also feel the strain, though some companies in these areas may manage to pass on costs or find alternate markets. Pharmaceuticals and parts of the electronics sector appear relatively safe for now, but the situation could change.
India’s export sector has grown strongly in recent years, with total goods and services exports crossing 820 billion dollars in the last financial year. The new U.S. tariffs do not erase that progress, but they do change the immediate picture. For now, the priority for both businesses and policymakers will be to protect jobs, keep key industries afloat, and find new ways to stay competitive in a tougher global trade environment.