India Hit Hardest In Asia As Trump Slaps 25% Tariff Plus Penalty; Key Sectors Face Export Shock

India's trade ties with the United States are set for a jolt as former US President Donald Trump announced a 25 per cent tariff, along with an unspecified penalty, on Indian goods beginning August 1. The announcement, made via Truth Social on July 30, is expected to have wide-reaching implications for India’s fast-growing exports to its largest trade partner.

“Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high... INDIA WILL THEREFORE BE PAYING A TARIFF OF 25 per cent, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST,” Trump posted, also citing concerns from non-tariff restrictions and strategic ties with Russia as reasons for the decision.

India Among Most Targeted Asian Economies

While several countries across Asia and beyond are facing elevated US tariffs, India's new rate—25 per cent plus a penalty—places it among the most severely affected. For comparison, Indonesia will see a 19 per cent tariff, while Vietnam and the Philippines are set to face 20 per cent. Even major global players like the European Union and Japan are subject to lower rates of 15 per cent.

India’s earlier tariff of 26 per cent (as of April 2025) now gets a considerable hike with the added penalty, leaving Indian exporters at a competitive disadvantage.

Sectors Most at Risk: Machinery, Electronics, Chemicals

India’s export profile to the US has evolved dramatically over the past decade. According to UN COMTRADE data, total trade between the two nations surged from $64.6 billion in 2013 to $118.4 billion in 2024. Exports accounted for the lion’s share of that growth—rising 89.3 per cent, from $42 billion in 2013 to $79.4 billion last year.

But it’s not just trade volume that has changed. The nature of goods exchanged has also shifted. Machinery and electronics, which formed less than 8 per cent of India’s exports to the US in 2013, now comprise nearly a quarter. Chemicals have also gained prominence, while traditional segments like textiles and apparel have declined in relative share.

business