On August 6, President Trump issued a new Executive Order under the International Emergency Economic Powers Act (IEEPA) in response to actions taken by the Government of the Russian Federation against Ukraine that impose threats to national security and foreign policy of the US. To deal with the national emergency, a new 25% tariff has been imposed on imports from India, citing India’s continued import of Russian oil.
The new tariff of 25% is effective on goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. EDT August 27. The tariff will be added on top of the existing 25% reciprocal tariff under IEEPA, resulting in a total IEEPA tariff of 50% on Indian imports.
Key Impacted Industries
Garments—The tariff has increased sharply from 12% to 62%, expected to severely impact exporters. Production is concentrated in Delhi NCR, Tiruppur, Bengaluru, and Ludhiana. With Indian garments effectively priced out of the US market, sourcing is expected to shift to Bangladesh, Vietnam, and China, making the outlook for this sector negative. In FY 2024–25, India exported garments worth $3.4 billion.
Textiles—The tariff has risen from 9% to 59%, expected to affect large exporters from Maharashtra and Panipat. Buyers are expected to shift to Bangladesh and Vietnam for basic products, while China will continue supplying formal textiles. The outlook is negative. In FY 2024–25, India exported $3.0 billion worth of home textiles.
Machinery & Parts—The tariff has increased from 1.3% to 51.3%, expected to affect exporters in Punjab, Delhi NCR, and Pune. The high tariff threatens India’s stronghold in Ludhiana, Jalandhar, and NCR, opening opportunities for China and Mexico. The outlook is negative. In FY 2024–25, India exported $6.7 billion worth of machinery and parts.
Auto Parts—The tariff has increased from 1% to 26–51%, expected to impact exporters based in Delhi NCR, Pune, Bengaluru, and Tamil Nadu. About $3.4 billion worth of exports now face a 25% tariff, while the rest face 50%, reducing competitiveness. The outlook is moderately negative. In FY 2024–25, auto parts exports were valued at $6.4 billion.
Shrimp—The tariff has increased from 0% to 60%, expected to hit exporters concentrated in Andhra Pradesh. At this level, exports to the US become unviable, and countries like Ecuador, Vietnam, and Indonesia are expected to dominate the market. The outlook is negative. In FY 2024–25, exports of vannamei shrimp stood at $2.0 billion.
Rice—The tariff has risen from 0.83–1.4¢ per kg to 61%, expected to affect exporters, primarily from Punjab and Haryana. The change is expected to help Pakistan in basmati exports, while US producers regain ground in non-basmati rice. The outlook is negative. In FY 2024–25, India exported $0.4 billion worth of rice.
Gold & Silver Jewelry—The tariff has increased from 5.8% to 55.8%, expected to affect exporters with hubs in Jaipur and Mumbai. The higher duties put SEEPZ Mumbai and Jaipur SEZs at risk of shutdowns and job losses. The outlook is negative. In FY 2024–25, jewelry exports were valued at $3.6 billion.
Carpet—The tariff has increased from 2.9% to 52.9%, expected to impact exporters primarily from Bhadohi-Mirzapur and J&K. India’s 58.6% share of the US carpet market is at risk, with Turkey and Vietnam likely to benefit. The outlook is negative. In FY 2024–25, carpet exports stood at $1.2 billion.
Cut & Polished Diamonds—The tariff has increased from 0% to 50%, expected to affect exporters from Surat and Mumbai. The higher tariffs put pressure on Surat’s 1.2 million-strong workforce, with risks of order cancellations and margin losses. The outlook is negative. In FY 2024–25, diamond exports totaled $4.9 billion.
Solar Panels—The tariff has increased from 0% to 50%, expected to affect exporters. Since Indian solar exports depend heavily on inputs from China and Vietnam, the US may choose to import directly from those countries. The outlook is negative. In FY 2024–25, India exported $1.1 billion worth of solar panels.
Petrochemicals—The tariff remains unchanged at 6.9%, with major exporters centered in Jamnagar, Gujarat. While tariffs are steady, linkages with Russian crude create risks of US rejection. The outlook is moderately negative. In FY 2024–25, petrochemical exports stood at $4.1 billion.
Smartphones—The tariff remains at 0%, expected to leave exporters, based in Tamil Nadu and Karnataka, unaffected. US demand remains stable. The outlook is neutral. In FY 2024–25, India exported $10.6 billion worth of smartphones.
Medicines (Retail Sales)—The tariff remains at 0%, benefiting exporters with hubs in Gujarat and Maharashtra. With no tariff change, growth prospects remain steady. The outlook is neutral.
The Order leaves room for adjustments. Tariffs may increase if India retaliates or decrease if India makes changes to address the concerns raised. As well, the Order allows for the similar action if any other country is directly or indirectly importing Russian Federation oil.
Mohawk Global Trade Advisors is keeping a close eye on the changing tariff landscape. We’re here to help you navigate country-specific impacts, manage risk, and stay compliant. Reach out to us for strategic guidance tailored to your supply chain.