India's $434 billion merchandise exports engine: What's at stake after Trump doubles tariffs to 50%

India's exports to the U.S. look a steep 50% tariff aft U.S. President Donald Trump connected Wednesday slapped an further 25% work connected Indian goods implicit the country's lipid purchases from Russia.

The other duties — acceptable to travel into effect wrong 21 days — volition beryllium stacked connected apical of the 25% tariffs connected New Delhi owed Thursday stateside, according to the enforcement order.

Analysts are informing that the higher U.S. tariffs hazard substantially diminishing the allure of Indian exports to the U.S., compared to determination peers.

"India's attractiveness arsenic an emerging manufacturing hub volition beryllium hugely undermined," Shilan Shah, lawman main emerging markets economist astatine Capital Economics, said successful a note. He estimates that the U.S. spending drives astir 2% of India's GDP and the other 25% tariff is "large capable to person a worldly impact."

India counts the U.S. arsenic its azygous largest export partner. Its full goods' exports reached astir $434 cardinal successful the twelvemonth ended March 2025, and astir 20%, oregon $86.51 cardinal worthy of goods were shipped to the U.S., according to the latest authoritative data.

The resulting driblet successful exports owed to tariffs would mean the system grows by person to 6% this twelvemonth and next, alternatively than the 7% maturation forecast anterior to Trump's announcement, Shah said.

The imaginable 50% other tariff connected Indian products could enactment a resistance of a full 0.6 percent constituent connected its GDP, according to Goldman Sachs' estimates.

India's large exports to the U.S. are engineering and physics goods, drugs and pharmaceuticals, gems and jewelry, according to the authorities data.

With notable variance crossed industries and small clarity implicit Trump's plans with sector-specific tariffs, present are segments that perchance basal to suffer the most:

Engineering goods, including products similar car parts, powerfulness instrumentality and concern machinery, person been India's biggest of exports to the U.S. and globally, hitting astir $117 cardinal successful the twelvemonth ended March.

Around 19.16 cardinal worthy of these concern goods, oregon astir 16%, were sold to the U.S. implicit that period.

Exports of iron, steel, and different products exports accounted for 17.07% of the full engineering exports, portion non-ferrous metals and products exports contributed 10.52%. Steel exports already look 50% sectoral tariffs, worsening the outlook for the assemblage arsenic the aforesaid levy present looms ample connected its different segments.

India's full goods exports jumped 1.92% successful June, successful portion driven by the emergence successful engineering goods, which roseate 1.35% to $9.5 billion.

The gems and jewelry, and textiles and apparels sectors, are besides expected to beryllium importantly jolted by the abrupt hike successful U.S. tariffs.

The gems and jewelry assemblage contributes 7% of India's GDP and employs astir 5 cardinal workers, according to a July study by a state-backed manufacture body.

About 33% of India's gems and jewelry exports went to the U.S. successful fiscal twelvemonth 2025.

Rajesh Mehta, enforcement president of Indian jewelry shaper Rajesh Exports, said successful an interrogation with CNBC Wednesday that higher tariffs volition beryllium an "additional burden," portion calling for authorities enactment for the sector.

Textiles is among the astir labor-intensive sectors successful India, straight employing astir 45 cardinal workers crossed the country. Similar to gems and jewelry, astir 34% of textile exports went to the U.S. successful the past fiscal year.

"Without a doubt, the caller tariff complaint is going to earnestly trial the resoluteness and resilience of India's textile and apparel exporters arsenic we volition not bask a important work differential vantage vis-à-vis galore different countries, but Bangladesh, with whom we vie for a larger stock of the US market," the Confederation of Indian textile manufacture said successful a statement dated July 30, earlier the latest hike successful duties was announced.

India's electronics assemblage relied connected the U.S. for 38% of its exports past fiscal year, making it "the astir exposed" to imaginable risks of the tariff exemptions being rolled back, according to Alexandra Hermann, pb economist astatine Oxford Economics.

India overtook China to go the apical exporter of smartphones sold successful the U.S. successful the 2nd quarter, aft Apple accelerated to determination its assembly of much iPhones to the South Asian nation.

In a major, though temporary, reprieve for companies specified arsenic Apple, Trump successful April announced to exempt smartphones, computers and different physics goods from tariffs.

India's U.S.-bound exports of physics goods person accelerated this year, and its exports successful March unsocial much than doubled to $2.76 cardinal from a twelvemonth earlier.

While the pharmaceutical assemblage is besides presently exempt from tariffs, Trump has threatened duties connected pharma exports to the U.S. In an interrogation to CNBC Trump said helium would initially enforce a "small tariff" connected pharma, and past rise that complaint to arsenic precocious arsenic 250% successful a fewer years.

India's pharma assemblage has a precocious dependency connected U.S. buyers, with its drugs and pharma exports to the U.S. reaching implicit $10.5 cardinal for the twelvemonth ended March 2025, accounting for astir 35% of the category's full shipments, according to the authoritative data.

"[India's] Chemicals wide person somewhat little US vulnerability but this masks the precocious pharmaceutical sector's US dependency therein," said Hermann, leaving the pharma assemblage highly susceptible to Trump's imaginable tariffs.

India besides exported alloy and aluminum to the United States, but commercialized successful those goods is taxed done a abstracted enforcement order.

"The U.S. could much easy root for supplies from alternate import locations, but it is overmuch harder for India to diversify distant from the U.S. crossed antithetic sectors," said Michael Wan, elder economist astatine MUFG Bank.

India competes against the likes of Europe successful pharmaceuticals; Vietnam and Mexico successful electronics; Cambodia, Sri Lanka, Bangladesh and Vietnam successful textiles; and Israel successful gems and jewelry, according to Wan. "If these tariff differentials stick, India's export competitiveness volition apt beryllium eroded implicit time," helium said.

Among the export-reliant nations that person clinched preliminary deals with Trump, Vietnam saw its tariffs lowered to 20% from 46%. In his latest tariff adjustment, Trump besides eased tariffs connected Thailand to 19% from the "reciprocal" tariff level of 36%, Bangladesh to 20% from 35% and Cambodia to 19% from 36%.

Around 32% of India's exports to the U.S. are presently exempt from tariffs, according to MUFG's estimates, including electronics and pharmaceutical products.