On July 30, 2025, U.S. President Donald Trump announced a sweeping 25% tariff on Indian imports effective August 1 and additional penalties tied to India’s continued Russian oil purchases. Analysts warn the move could affect over half of India’s exports to the U.S., widening trade tensions and unsettling markets.

The most vulnerable sectors include gems & jewellery, which export over $9 billion annually to the U.S., textiles and apparel, seafood (notably shrimp), electronics, pharmaceuticals, iron & steel, machinery, and footwear. These industries together account for a substantial share of bilateral trade and are expected to feel immediate pricing and margin pressures.

Estimates suggest potential export losses ranging from $6 billion (10% tariff) escalating up to $31 billion (25%), possibly dampening GDP growth by 20–40 basis points in FY26.

Despite immediate fallout such as Gift Nifty futures dropping nearly 0.7% and rupee depreciation economists and industry leaders anticipate a trade deal by Q3 or Q4 2025 to avert prolonged disruption. India’s strategic diversification of export markets, policy buffers, and internal demand are expected to cushion broader impacts.

As trade diplomacy unfolds, India is urged to accelerate negotiations, provide export support, and push for bilateral clarity. Otherwise, key labour-intensive sectors like gems & jewellery and textiles could face significant economic setback.