Indians reacted with shock after US Senator Lindsey Graham announced that President Donald Trump had green-lighted a Bill allowing a 500% tariff levy on Indian exports to the United States.
MSMEs, Jobs
at Risk
Economists warned that India’s MSME sector already under strain due to tariffs of up to 50% could face severe job losses if the proposed levy is implemented.
Tariff Structure Key to Impact
The focus now will be on how the Trump administration structures the tariffs. In August 2025, pharmaceutical exports, along with semiconductors and aluminium products, were exempt when the US imposed an additional 25% tariff, taking the overall levy on Indian exports to 50%. Analysts say New Delhi can respond meaningfully only after examining the fine print.
Export Losses Could Reach $10 Billion
Sankhanath Bandyopadhyay, economist at Infomerics Valuation and Ratings, said exports of gems and jewellery, marine products, pharmaceuticals, electronics and steel sectors heavily dependent on the US market could suffer significant losses. “If tariffs are reinstated or raised, Indian exporters could face losses of $7–10 billion,” he said.
Limited Policy Options for India
Economists note that approaching the WTO may offer little relief, as setting up a committee could take over a month and Trump is unlikely to comply with any ruling.
US Crude Purchases as a Bargaining Chip
Suranjali Tandon, Associate Professor at the National Institute of Public Finance and Policy (NIPFP), believes the US wants India to buy more American crude. She pointed out that similar steps by the EU helped ease tensions with Washington.
Constraints on Buying US Oil
India has already increased US crude imports. Data from the Ministry of Commerce and Industry show that between April and November 2025, India imported 178.1 million tonnes of crude, including 13 million tonnes from the US a 92% year-on-year rise. However, energy experts caution that Indian refineries are better suited to Russian and Middle Eastern crude, limiting how much US oil India can absorb. Any major shift would take time and investment.
