US President Donald Trump’s imposition of a blanket 26 per cent tariff on imports from India has sent ripples across various industries. While the decision is expected to disrupt several key sectors in India, some might find advantages. India’s primary exports to the US include pharmaceuticals, telecom equipment, gemstones, petroleum products, gold jewellery, and ready-made cotton garments. On the import side, key commodities include crude oil, coal, petroleum products, electric machinery, and aerospace components.
According to a New York Times report, the White House officials explained that the tariff figures were calculated by the Council of Economic Advisers using established methods. The White House clarified how the calculations were done. Although the explanation involved some complex calculations, the report stated that the formula is derived from the US trade deficit with a country, divided by that country’s exports. However, it cannot be considered as foolproof and there are many loopholes. For e.g, the calculations include non-tariff measures like domestic taxes (strange, since it’s not differentiating to foreign goods) and currency manipulation.”
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Key sectors to be impacted by US tariff
Among the worst affected by the recent tariff hike are India’s electronics and gems and jewellery sectors. The US imports nearly $14 billion worth of electronics and over $9 billion worth of gems and jewellery from India. Meanwhile, the pharmaceutical sector, semiconductors, and critical minerals have been excluded from these tariffs.
Dr Manoranjan Sharma, Chief Economist at Infomerics Rating, said, “President Trump’s imposition of a 26 per cent reciprocal tariff on India would hit India’s exports by 3 to 3.5 per cent and GDP growth in FY26 by 40-60 bps. At the sectoral level, nearly $14 billion worth of electronics products and over $9 billion worth of gems and jewellery would be dented. While the 26 per cent tariff is inapplicable to auto parts and aluminium products, those will still attract the 25 per cent tariff announced earlier.”
Here is a look at how various sectors are or will be impacted by Trump’s tariff:
Electronics industry: India’s electronics exports to the US are worth $14 billion and the increased tariffs may lead to higher prices, reducing demand from American buyers. Ashok Chandak,
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