Indian Exports Worth $25 Billion Escape Trump’s New India Tariffs

U.S. President Donald Trump has unveiled a plan to enforce a 25% tariff on Indian imports starting August 1, citing India’s high customs duties, extensive trade barriers, and continued economic engagement with Russia. Despite the broad sweep of this tariff policy, over $25 billion worth of Indian exports—spanning pharmaceuticals and smartphones—remain exempt for now.

A spike in exports resulted from exporters' deliberate acceleration of shipments before the August deadline. About 23% of India's total merchandise exports went to the US by June, up from roughly 17–18% at the beginning of the fiscal year. Among these, duty-free status is now granted to pharmaceutical exports, which are projected to be worth $10.5 billion, and electronics, mainly smartphones, which are valued at $14.6 billion, under exemption conditions.

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These exemptions are significant given that smartphones and drugs represent nearly 29% of India's outbound shipments to the United States. However, analysts warn these reliefs may prove temporary. Trump has hinted that future duties could be extended to pharmaceutical imports, potentially reaching 200%, while smartphone duty exemptions may be revoked depending on ongoing policy decisions.

Rajiv Kumar, India's commerce secretary, has downplayed the permanence of Trump’s announcement. He described the announced 25% tariff as a negotiation tactic rather than a fixed policy, stressing that it has not been formalised and may shift when trade talks progress.

India’s exports to the U.S. in April–June FY26 totalled $25.52 billion, reflecting nearly 23% year-on-year growth. Despite this, overall export growth slowed—less than 2% in the first quarter and contracting over 4% in the last quarter of FY25. Petroleum exports, valued at $4.09 billion, are also covered by current exemptions. 

While the tariff sweep threatens labour-intensive sectors such as textiles, gems, jewellery, auto components, and petrochemicals, the current exemption for pharma and electronics offers a buffer. Still, export sectors remain on alert as Trump’s administration may extend “secondary tariffs”—punitive measures linked to India’s trade ties with Russia and BRICS alliances. These could apply beyond the announced 25% and remain unspecified in scale. 

S&P 500 futures and Nasdaq 100 futures rose on Thursday morning following solid earnings reports from tech giants Microsoft and Meta Platforms.

India’s government continues asserting its commitment to negotiating a “fair, balanced, mutually beneficial” bilateral trade agreement, aiming to safeguard national interests and protect sectors key to domestic welfare. 

Conclusion

Uncertainty lurks even as India's smartphone and pharmaceutical exports presently avoid Trump's 25% tariffs. Punitive "secondary tariffs" might still be imposed, and the exclusions might only last temporarily. Further change is dependent on the results of ongoing trade negotiations.