Trump's 50 pc tariffs on India activated: List of sectors hardest-hit, exempted and how Bharat navigates the onslaught

"Customers asked us to cancel the orders we had already placed. Our US customer said that there will be no production until a decision is taken on tariff. The situation is very bad at this time," the Kanpur businessman told The Times of India, as uncertainty looms large on Indian exporters, who are likely to be impacted at various degrees with the imposition of additional 25 percent tariffs on India as a penalty for purchasing oil from Russia.

Sectors hardest-hit by Trump tariffs

• In an impact on West Bengal's export driven economy, the state's leather, engineering and marine sectors are going to be impacted hugely due to the tariff, the Times of India reports.
• According to a report by Moneycontrol, labour intensive sectors will be hardest-hit.
• Gems and jewellery will face the brunt of 52.1% tariff.
• The tariff will be as high as 50 percent on goods like garments, footwear, sporting goods, furniture, chemicals.

Sectors exempted from Trump's tariffs

• Pharmaceuticals
• Auto components, steel and aluminium
• Copper and other metals
• Semiconductors and electronics (computers, smartphones, tablets, flat-panel displays, integrated circuits, SSDs)
• Energy products (crude oil, refined fuels, natural gas, coal, electricity)
• Bullion, Lumber, Books, and Informational Materials 

Why is Trump penalising India?

The Trump administration, which was earlier viewed as India-friendly, has slapped a 25 percent tariff on the South Asian country for its high tariffs on American exports and another 25 percent for purchasing oil from Russia which is fighting a war against Ukraine.

The White House, which has singled out India over Russian oil purchase, said the second 25 percent tariff will be effective from August 27, 2025.

Since the conflict in Ukraine began in early 2022, India significantly increased its imports of discounted Russian crude oil—now comprising over 30 percent of its total crude imports.

Indian refineries then export refined petroleum products globally which critics, especially in the U.S., argue that indirectly supports Russia’s war effort by funneling money into its economy.

In response, the US proposed tariffs and trade measures targeting India’s exports to discourage this behavior.

50 percent tariff on India could be a boomerang on US: SBI

India's top public sector bank State Bank of India (SBI) has claimed the 50 percent tariff on the country could turn out to be a boomerang on the US economy, causing inflation and slashing of GDP.

The US GDP could tank by 40 to 50 basis points due to the tariffs on India, an analysis by SBI said.

(L-R) Donald Trump and Narendra Modi during a bilateral meeting. Photo: PIB

India refuses to wilt under pressure

Prime Minister Narendra Modi, who according to a German newspaper did not receive some four phone calls from friend-turned-adversary Trump since the faceoff, on Monday reiterated that his government will not compromise on the interests of farmers and small-scale industries, cautioning that "pressure on us may increase, but we will bear it".

"Today in the world, everyone is busy doing politics based on economic interests. From this land of Ahmedabad, I will tell my small entrepreneurs, my small shopkeeper brothers and sisters, my farmer brothers and sisters, my animal husbandry brothers and sisters and I am saying this on the land of Gandhi.

"Be it the small entrepreneurs, farmers, or animal keepers of my country, for everyone, I promise you again and again, your interests are paramount for Modi," PM Modi said, addressing a gathering after launching multiple projects in Ahmedabad.

"My government will never let any harm come to the small entrepreneurs, farmers, and animal keepers. No matter how much pressure comes, we will keep increasing our strength to withstand," he added.

How is India tackling the situation?

1. Export Support & Relief Measures

• The government is preparing a Rs 20,000 crore export promotion mission, targeting sectors impacted by tariffs through trade finance, e-commerce hubs, brand-building, warehousing, and regulatory support.
• Targeted financial relief—like tax rebates, subsidized credit, and insurance steun—are being offered to struggling sectors such as textiles, gems & jewellery, and shrimp.
• Experts suggest deeper measures: temporary subsidies equal to 25–30% of export value for severely affected sectors and efforts to boost domestic consumption via “Brand Bharat” campaigns.
• The Reserve Bank of India (RBI) is poised to cushion economic shocks and promote trade through local-currency mechanisms.     

2. Market & Export Diversification

• India is aggressively diversifying its export markets—strengthening ties with Africa, Latin America, Southeast Asia, the Middle East, and the EU to reduce dependence on the U.S.
• Key trade agreements are being fast-tracked, including the FTAs with the UK, Australia, UAE, and ongoing negotiations with the EU, GCC, and CPTPP.
• The textile ministry has set up four committees to chart diversification strategies, signaling a structured approach for pivoting to alternate markets.    

3. Strengthening Domestic Capacity & ‘Atmanirbhar Bharat’

• The PLI (Production-Linked Incentive) schemes, across 13 sectors such as electronics, automotive, and pharmaceuticals, are being reemphasized to fortify domestic manufacturing and reduce import reliance.
• Broader reforms under Make in India 2.0 and infrastructure upgrades aim to enhance ease of business, logistics, and industrial competitiveness.   

4. Diplomacy and Trade Negotiations

•   India is engaging in high-level diplomatic negotiations with the U.S. to seek tariff relief and secure a balanced trade deal that preserves strategic ties. 
•   As part of its diplomatic juggling, India has initiated tariff reductions on select U.S. imports (like almonds, bourbon whiskey) to facilitate negotiations while protecting key domestic exports.
•   For now, India is avoiding retaliatory tariffs—opting instead for WTO legal options and measured diplomacy.   

5. Macroeconomic Cushioning

• Following the tariff announcement, the Indian rupee dropped significantly and stock markets tumbled. The RBI has acted preemptively to stabilize the economy.
• The Narendra Modi government has reaffirmed its commitment to protecting domestic sectors—including farmers and MSMEs—while resisting U.S. pressure, especially on Russian oil imports.