India is facing the possibility of major trade tariffs from the United States starting August 27, 2025.
US President Donald Trump has announced an additional 25% tariff on Indian goods, which could raise the total trade penalty to 50%.
Why Are the Tariffs Being Imposed?
The US tariffs are linked to India’s decision to continue buying oil from Russia despite pressure
from Washington to reduce imports. This move has triggered stronger trade action from the US government.
Chances of Tariff Implementation
A Nomura investor survey shows mixed views:
- Nearly 50% of investors see less than a 40% chance of tariffs going into effect.
- 31% believe the probability is between 20% and 40%.
- About 23% remain undecided.
Still, Nomura expects the tariffs could remain in place through FY26, which may lower India’s GDP growth to 6.0% from 6.2%.
Impact on Indian Exports
If imposed, India would face some of the highest trade barriers globally, alongside Brazil. Key details include:
- India exports $87 billion worth of goods to the US annually.
- Pharmaceuticals and electronics, accounting for 30% of exports, are exempt.
- Sectors at risk include:
- Textiles
- Gems and jewelry
- Leather goods
These industries are labor-intensive, and experts warn of job losses and negative market sentiment.
Government Response
The Indian government is reportedly preparing support measures such as:
- Credit guarantee schemes
- Relief programs for employment-heavy sectors
What This Means
If tariffs are implemented, Indian exporters will face higher costs in the US market, hurting competitiveness, economic growth, and employment in crucial industries.
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