Trump Slaps 25% Tariff on Indian Imports, Exempts $25 Billion in Smartphones and Pharma
Washington DC | August 1, 2025 — In a move that could reshape Indo-US trade relations, former US President Donald Trump has imposed a 25% tariff on Indian imports, citing India’s high tariff structure on American goods and its ties with BRICS and Russia. However, the White House has temporarily spared smartphones and pharmaceuticals — two of India’s largest export segments to the United States — from the higher duties.
The new tariff regime is set to take effect from August 1, impacting a wide range of Indian goods, except shipments worth over $25 billion related to pharma and electronics.
Pharma and Electronics Exempted — For Now
According to Commerce Ministry data, India exported $14.6 billion worth of smartphones and $10.5 billion worth of pharmaceuticals to the United States in FY25. These sectors have been exempted from the tariff hikes, at least in the initial phase.
Industry insiders confirm that these exemptions were key in boosting Indian exports to the US in 2025, even as global trade slowed.
From January to June 2025, the US’s share in India’s total merchandise exports rose from 17-18% to over 20%, mainly due to the absence of duties on these two product categories.
“Front-loading by exporters ahead of the August deadline, coupled with the strategic exemptions on smartphones and drugs, helped push exports to the US despite sluggish global demand,” said a senior analyst at the Federation of Indian Export Organisations (FIEO).
Indian Exports to US Surge Despite Global Headwinds
In Q1 FY26, India’s total exports rose by less than 2% year-on-year. Yet, exports to the United States grew nearly 23%, touching $25.52 billion, with overall bilateral trade reaching $32.41 billion in the quarter.
In contrast, the final quarter of FY25 saw an export contraction of over 4%, reflecting the broader global slowdown. However, the resilient growth in US-bound shipments provided a much-needed cushion to India's external sector.
During the same period, exports to the US accounted for approximately 23% of India’s total outbound shipments, highlighting the deepening trade linkage between the two democracies.
Tariff Justification: India’s BRICS Role, Russia Ties
President Trump linked the tariff decision not only to India's high tariffs on American products but also to its “continued alignment with BRICS and Russia.”
Although India’s energy and arms transactions with Russia remain a matter of strategic ambiguity for the United States, Trump’s tone was unmistakably firm.
“We will not allow unfair trade practices and anti-American alliances to go unchallenged,” Trump said on his social platform, Truth Social.
“India has tariffs on American goods, yet wants duty-free access to ours. That ends now.”
Despite the strong rhetoric, petroleum exports from India to the US, which stood at $4.09 billion, remain exempt from tariffs, likely due to Washington’s broader energy strategy and global price stability concerns.
Potential Risks on the Horizon
While the pharma and smartphone sectors have received a temporary reprieve, Trump has hinted at further action.
In a previous speech to Republican donors, the former President threatened to impose tariffs of up to 200% on foreign-made drugs, raising alarms in India’s pharmaceutical industry.
“India cannot rely on this exemption lasting forever,” said a trade policy expert at New Delhi-based Global Trade Watch.
“With the elections approaching, Trump could target even high-value sectors if it helps his campaign narrative.”
Similarly, smartphone exports could come under scrutiny if the US feels threatened by Chinese components in Indian-assembled devices or if India’s trade with other BRICS nations deepens.
Industry Cautious But Hopeful
Exporters and industry bodies in India have urged the government to engage with Washington to preserve the exemptions and prevent wider trade fallout.
“Our exports to the US are a key driver for job creation and economic growth,” said a spokesperson from the Electronics and Computer Software Export Promotion Council (ESC).
“We urge policymakers to protect these lifelines while maintaining India’s strategic autonomy.”
Meanwhile, Indian pharma companies, many of which rely heavily on US FDA approvals and American healthcare demand, have started contingency planning in case the exemptions are revoked.
India’s Response Remains Muted
The Indian government has so far avoided direct confrontation, likely hoping that diplomatic engagement can avert a full-blown trade war.
According to Commerce Ministry officials, backchannel discussions with American trade negotiators are ongoing, and India has reiterated its commitment to balanced trade while defending its tariff structure as WTO-compliant.
India’s current average tariff on industrial goods stands at around 13.8%, which Trump and his advisors consider “excessively protectionist.”
Final Thoughts from The Trending People
As the world’s two largest democracies navigate an increasingly turbulent global trade landscape, tariff diplomacy is once again center stage. While exemptions for smartphones and pharmaceuticals offer short-term relief, the longer-term uncertainty looms large.
India must now carefully balance its strategic autonomy with the need to safeguard economic interests. For the United States, the challenge lies in asserting fair trade principles without alienating a key partner in the Indo-Pacific.
With Trump’s tariff threats extending well beyond economic logic into geopolitical calculations, the coming months will likely test the resilience of the Indo-US economic partnership.