New Delhi: The United States has announced that, starting August 7, it will put a flat 25 percent tax (tariff) on all goods coming from India. This means every Indian product shipped to the US—from medicines and smartphones to fuel and electronics—will cost American buyers 25 percent more, making these goods much less attractive compared to those from other countries. Previously, some types of goods like certain medicines or electronic parts were excluded from extra taxes, but now India gets no such exceptions. By contrast, countries like China still have some exemptions for sensitive products.
Goods that are already on their way to the US will be charged the earlier, usually lower, rates (about 10 percent) until October 5, 2025. However, items like steel and aluminium will be taxed at 50 percent, as they were before. The new rule could reduce India’s exports to the US by up to 30 percent, dropping from $86.5 billion last year to around $60.6 billion in the next year. Sectors that could suffer most include petroleum products, smartphones, and medicines, all of which depend on parts or ingredients from outside India and don’t make much profit at home.
Other countries, like Bangladesh, Sri Lanka, Taiwan, and Vietnam, will pay lower 20 percent tariffs, so Indian exporters will be at a clear disadvantage. The US says these tariffs could be reduced later, but only if India makes a trade deal that matches what the US wants. Until then, the extra charge will make Indian goods much less competitive in the American market. The move is considered one of the strictest trade decisions taken by the US against a major partner in years.