The White House claims India imposes an effective tariff rate of 52% on US products and has responded with a 27% reciprocal tariff on Indian exports.

India’s exports to the US are heavily concentrated in a few key sectors, making them vulnerable to Trump’s reciprocal tariffs. Engineering and electronic goods, jewellery, and pharmaceuticals are some of the industries that make up a significant share of India’s exports to the US.

Among major sectors/commodity groups, electrical, telecom, and electronic has just a 0.41% tariff currently, which could go up by 27% to 27.41%. For textiles products, the current tariff stands at 8.99%, which would become 35.99%.

The reciprocal tariff will be applied in addition to the existing tariff on each product.

While this appears to be a setback for India, which exports over $80 billion worth of goods to the US, the overall impact on India’s GDP is expected to be minimal. In fact, the move may offer India a competitive edge, as many of its emerging market peers—including China, Vietnam, Thailand, and Indonesia—face even steeper reciprocal tariffs.

“Our previous static analysis suggests that India’s exports to the US could drop by $30-33 billion (0.8-0.9% of GDP) at 26% tariffs, not adjusting for cross-country hits/responses," said Madhavi Arora, chief economist at Emkay Global Financial Services.

(The White House had released a set of charts earlier, where the figure for India was 26%.)

 

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The reciprocal tariffs are set to take effect on 9 April, and will remain in effect “until such a time as President Trump determines that the threat posed by the trade deficit and underlying nonreciprocal treatment is satisfied, resolved, or mitigated".

The US has consistently been India’s biggest trade partner, with a 19.1% share in its total exports in the first ten months of FY25. India, however, relies even more on American goods, with the US making up 6.2% of its total imports in FY24. India has maintained a steady trade surplus with the US, which reached $35.3 billion last fiscal year.

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The US has already imposed a 25% duty on certain steel products, a 10% duty on aluminum products, and a 25% tariff on the automobile sector. These have been exempted from reciprocal tariffs.

The Trump administration has calculated effective tariff rates imposed by other countries on US products using its own methodology, factoring in trade tariffs, non-monetary barriers, and currency movements, among other elements. However, questions have been raised about the accuracy of these figures. A Mint analysis of official US trade data suggests that Washington derived these rates by simply dividing the value of the trade deficit by the value of imports from each country. Read more here.

An earlier Mint analysis, based on data from the World Integrated Trade Solutions (WITS), found that India’s weighted average tariff rate on US products was 9.6% in 2023—higher than the 2.6% imposed by Washington on Indian goods. 

While the weighted average tariff rate, which reflects duties across various imported goods, has declined significantly since the 2000s, it remains a point of contention for the US. India’s average tariff rate, which exceeded 20% in 2000, has now fallen below 10%, while the US's tariff on Indian goods peaked at 3.9% in 2001 before declining to 2.6% in 2023.

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As a result, the tariff gap between the two countries narrowed from a peak of 22.9 percentage points in 2000 to 3.2 percentage points in 2021. However, the gap had widened again since 2022, surpassing 7 percentage points, according to a February report from India Ratings.

Whether a 27% reciprocal tariff—justified by a claim that India imposes a 52% tariff on US goods—is accurate or fair remains a subject of debate. However, the shifting trade landscape may also present new opportunities for India.

“The tariffs may create strategic opportunities for India to gain market share in specific sectors. With Trump imposing even higher tariffs on China (34%), India could potentially enhance its market position in textiles, clothing, and footwear exports to the US," said Karthick Jonagadla, founder & CEO of Quantace Research.

"Ongoing trade negotiations and policy recalibrations are expected to further bolster a more balanced and expansive bilateral trade framework (between India and the US," Jonagadla added.

Corrections and clarifications: An earlier version of this article incorrectly implied that the tariff on each item would be increased to 27%. It has been corrected to state that the 27% tariff is in addition to existing tariffs. The error is regretted.