As second round of Trump tariffs kick in, what changes for Indian exporters?

The newly announced 26% US tariffs, effective Wednesday, may crimp India’s exports to that country by 6.4% this year to  $5.76 billion, trade policy think tank Global Trade Research Initiative (GTRI) said.

Fish and crustaceans may feel the most pain under the new tariff regime as exports of marine products may fall by 20.2%, GTRI calculated, adding that iron or steel articles may also face the brunt as their exports are likely to decline by 18%, followed by diamonds, gold, and related products by 15.3%.

US President Donald Trump on 2 April slapped reciprocal tariffs on nations he says treated the US unfairly, triggering a global trade war that sent stocks, commodities and bullion crashing for three sessions.

While the overall effect of the new tariffs points toward a decline in trade, India’s competitive position in select product segments may help cushion some of the losses, GTRI founder Ajay Srivastava said..

The study assesses sector-specific exposure, tariff rate changes, and competitive dynamics with key players like China, Mexico, and Canada, highlighting sectors where India may gain or lose under the revised U.S. tariff regime.

Among pockets of opportunity amid the disruption, India may see modest export gains in sectors where the US has raised tariffs on competing countries such as textiles (4.2%), apparel (3.2%), ceramic products (3.1%), and pharmaceuticals (2.1%).

Petroleum, solar panels, and pharmaceuticals and copper have been exempted from country-specific tariffs. These high-value items account for $20.4 billion, or 22.7% of India’s exports to the US, GTRI said, adding that these will continue to face only the standard most favored nation tariff.

Steel, aluminum, automobiles, and auto parts—sectors previously targeted by the Trump administration and representing $2.2 billion, or 2.5% of India’s total exports—will continue to be subject to a 25% tariff.

The remaining basket of goods, whose exports are valued at $67.2 billion, or 74.8% of total trade, will be hit with a 26% tariff. While MFN tariffs still apply, this sweeping hike is expected to reshape trade dynamics across a wide range of industries

Exports of vehicles and parts are projected to drop by 12.1%, while electrical, telecom, and electronic products may decline by 12%. Exports of other categories such as plastics and articles thereof (-9.4%), carpets (-6.3%), petroleum products (-5.2%), organic chemicals (-2.2%), and machinery (-2.0%) are also expected to be affected.

Out of the total exports to the US, electronics and smartphone category is 36%. Still, the tariff hike could reduce India’s exports to the US by 12%, or roughly $1.78 billion in this category.

India exported electronics and smartphones worth $14.4 billion to the US in 2024, accounting for 35.8% of its global shipments in this category.

India is the fourth-largest supplier of electronics and smartphones, behind China, Mexico, and Vietnam, with a 6.68% share.

China is the top supplier of electronics and smartphones to the US, with a 26.15% share, and will face a far higher 54.41% tariff.

However, India’s heavy dependence on imported inputs may reduce competitiveness in the electronics and smartphones category.

India exported $12.7 billion of pharmaceuticals to the US in 2024, accounting for 54.5 % of India’s global drug exports.

India is the fourth-largest pharmaceutical supplier to the US, after Ireland, Switzerland, and Germany, holding a 5.98% share.

While the sector, primarily focusing on generic medicines, is projected to grow modestly by 2.1%, or $267.3 million, largely due to competitively priced active pharmaceutical ingredients (APIs) from China and India, industry caution persists amid concerns that Trump may revise tariff policies later.