Impact of US Tariff on Indian Exports: A Trade Tussle with Ripple Effects

Mr.A.Venkatesh Assistant Professor, Assistant Professor – Department of Commerce (ISM & CA)

In today’s globally connected economy, any shift in trade policy by a major power like the United States sends shockwaves across the world. One such policy tool—tariffs— has been at the heart of trade disputes, especially in recent years. For India, a country that significantly relies on exports to fuel its economy, U.S. tariffs can either unlock or obstruct trade potential.

What Are Tariffs and Why Do They Matter?

Tariffs are taxes imposed on imported goods, designed either to protect domestic industries or to retaliate against perceived unfair trade practices. While they can help local producers, they often raise the cost of goods for consumers and disrupt global supply chains. For export-driven economies like India, higher tariffs in major markets like the U.S. can be detrimental.

Snapshot of India–U.S. Trade Relations

The United States is India’s largest export destination, with exports ranging from textiles and garments to pharmaceuticals, engineering goods, software services, and more. In 2023-24, bilateral trade between India and the U.S. crossed $118 billion, with Indian exports contributing more than half.

However, the relationship has seen ups and downs, particularly with the imposition of tariffs under various U.S. trade policies such as:

Section 232 (National Security Tariffs on steel and aluminum)
Section 301 (Tariffs targeting countries with unfair trade practices)

Sectors Hit Hard by Tariffs

When the U.S. imposed tariffs on steel and aluminum in 2018 under the Trump administration, Indian exporters were immediately affected. Here’s how:

Engineering goods like industrial machinery and automotive components faced reduced competitiveness.
Agricultural exports, including processed foods and spices, also came under pressure when India lost the Generalized System of Preferences (GSP) benefits in 2019, affecting nearly $5.6 billion worth of duty-free exports.

Pharmaceutical and IT Sectors: The Silver Linings

Despite these challenges, some sectors have managed to weather the storm:

Pharmaceuticals, owing to their critical role in the U.S. healthcare sector, continue to see steady demand.
Software and IT services, being largely tariff-insensitive digital exports, remained unaffected and even grew

Policy Responses from India

India has not remained passive in response to U.S. tariffs. Key strategies have included:

Retaliatory Tariffs: India imposed higher tariffs on certain U.S. goods like almonds, walnuts, and apples.
Diversification: Exporters have been encouraged to explore alternative markets in Europe, Southeast Asia, and Africa.
FTA Negotiations: India is actively negotiating Free Trade Agreements with other countries to hedge against overdependence on the U.S. market.

Recent Developments and a Glimmer of Hope

In 2023, there were signs of reconciliation. India and the U.S. resolved several WTO disputes, and the U.S. restored some of India’s GSP privileges in select sectors. Highlevel diplomatic engagements have also focused on building a resilient trade relationship, with technology, green energy, and defense emerging as new areas of cooperation.

Conclusion: Navigating a Complex Future

The impact of U.S. tariffs on Indian exports highlights the fragile interdependence of the global economy. While some sectors struggle under tariff pressure, others adapt and thrive. For Indian exporters, the key lies in resilience, innovation, and diversification. For policymakers, it’s about building strategic trade partnerships and ensuring India remains competitive on the global stage. As trade policies evolve, the India-U.S. relationship will continue to face tests—but also offer opportunities for stronger, mutually beneficial ties.

Professor Dr S. Panneerselvam, former National Fellow, Indian Council of Philosophical Research (ICPR), New Delhi, and former Professor and Head, Departmnent of Philosophy, University of Maders, has thirty-five years of postgraduate teaching and research experience. He has authored/edited nineteen books, in addition to more than 100 research papers in leading philosophical journals and anthologies of global repute. Also, he has preseated papers in more than 300 national and international conferences.

Besides this, Dr Panneerselvam has organized fifty national and international conferences and seminars as director and coordinator. His fields of specialization include Indian Philosophical Traditions, Inter-cultural Philosophy, Postmodern Hermeneutics, Contemporary Continental Philosophy and Tamil Philosophical Tradition. He is a member of Board of Directors of the Asian Network for Comparative Studies on Mind, Chung-Ang University, South Korea, and a member of the editorial committee for the joumnal, Bio-Cosmology-Neo-Aristotelism, Novgorod State University, Russia. He has been a Visiting Professor of the American University of Sovereign Nation, USA and also at Kumamoto University, Japan.

Presently, Dr Panneerselvam is the General Secretary of the Indian Philosophical Congsess. He is also a Member of the Academic Committee, Indian Institute of Advanced Study, Simla, and Member of Indian Council of Philosophical Research, New Delhi. He is also the Ombudsperson for the Grievance Redressal Cell of Agurchand Manmull Jain College since he academic year 2022-2023.