India, often labeled a "tariff king" by President Trump, faces potential export losses estimated between $6 billion to $31 billion, depending on the tariff rates applied. Analysts project that a 10% tariff could reduce Indian exports by approximately $6 billion, while a 25% tariff might escalate losses to around $31 billion. Sectors such as apparel, gems, and jewelry are particularly vulnerable due to their substantial export volumes to the U.S.
The automotive industry is also under scrutiny, with the U.S. planning to impose a 25% tariff on auto parts and automobiles. India's auto component exports to the U.S., valued at $2.2 billion, could experience disruptions. However, some industry experts suggest that these tariffs might present opportunities for Indian manufacturers to increase their market share as global supply chains adjust.
In response to these developments, India and the U.S. have engaged in bilateral trade discussions aimed at mitigating the impact of the tariffs and enhancing economic cooperation. Recent talks in New Delhi focused on reducing tariffs and easing non-tariff barriers, with both nations aiming to finalize the first tranche of a Bilateral Trade Agreement by autumn. The overarching goal is to expand bilateral trade to $500 billion by 2030, addressing market access issues and integrating supply chains more closely.
Despite these negotiations, uncertainties remain regarding the immediate effects of the U.S. tariffs. While some Indian industries may find opportunities amid the shifting trade landscape, others could face significant challenges. The Indian government is contemplating measures such as reducing or eliminating customs duties on certain U.S. imports to strengthen trade ties and potentially offset some of the adverse impacts.