What India can — and cannot — do quickly Likely moves under discussion in New Delhi:
- Targeted exporter relief: Interest-subvention and guarantee schemes to bridge cancelled/renegotiated orders and working capital gaps.
- Market diversification: Fast-tracking trade outreach to offset U.S. losses (while difficult in the short run for high-U.S.-exposed categories like apparel and jewelry).
- Energy diplomacy: Exploring phased diversification away from Russian barrels only if price-comparable alternatives emerge — a bargaining chip in any de-escalation. What’s hard immediately: Swiftly replacing the U.S. consumer market for fashion, gems and certain auto parts; supply chains and brand relationships built over years cannot be re-routed in weeks.
The bigger picture
Even before this week, Washington’s April and July reciprocal tariff architecture had raised India’s baseline exposure; the IEEPA-based 25% add-on turns a structural fray into an outright tariff war. With the U.S. accounting for nearly 18% of India’s merchandise exports, the immediate damage is concentrated in labor-intensive sectors that compete on price. Pharmaceuticals and smartphones are temporarily cushioned, but policy fluidity — and explicit White House authority to modify tariffs further — keeps uncertainty high.
What to watch next
- Line-by-line customs guidance and any further exemptions (phones/pharma today could change). .
- Signal of negotiations resuming — Trump says talks are frozen; any back-channel progress would show up in adjustments to the effective date or scope.
- Exporter behavior: Apparel and jewelry order books over the next 2–4 weeks will show how much production shifts to rivals. Early reports already show pauses and re-routing.
Key facts at a glance
- Tariff rates: ~25% (reciprocal) + 25% (IEEPA oil-related)⇒ up to ~50% on many Indian goods. Timing: Aug 7 and Aug 27–28.
- Top exposed sectors:Textiles/apparel, gems & jewellery, select auto parts; smartphones & pharma presently exempt.
- Trade size:$87.3 bn in U.S. goods imports from India (2024); U.S. takes ~18% of India’s merchandise exports.
