Donald Trump said on Tuesday that he will increase the 25% tariff on Indian exports to the US “substantially over the next 24 hours".
India could risk losing its competitive edge in nearly $64 billion worth of exports to the United States if President Donald Trump goes ahead with a proposed 25% tariff and an additional 10% penalty over Russian oil imports, Reuters reported, citing four sources familiar with an internal government assessment.
Donald Trump stated on Tuesday that he will increase the 25 percent tariff on Indian exports to the United States "substantially over the next 24 hours" in the midst of a serious diplomatic crisis between India and the United States. Last week, the US president lumped India with Russia as “dead economies," criticizing the country for its trade barriers and continued purchases of Russian weapons and energy.
It is anticipated that India's $4 trillion economy's relatively low export share will limit the direct impact on growth to 40 basis points. Despite the uncertainty brought on by tariff increases, the Reserve Bank of India maintained its steady rate of interest and maintained its GDP growth forecast for the current April-March financial year at 6.5 percent on Wednesday. Impact on trade According to the Reuters report, the trade impact estimates were prepared by the Indian government after Donald Trump announced the unexpectedly high tariff for Indian goods and the penalty.
The Indian government assumed a 10% penalty in its assessment report for purchasing Russian oil, bringing the tariff to 35%, according to the report. Trump said on Wednesday his administration will decide on the penalty for buying Russian oil post the outcome of US efforts to seek a last-minute breakthrough in the Ukraine war.
According to a source, the tariff and possible penalty will have an effect on nearly $64 billion worth of India's exports to the US, which make up about 80% of India's total exports to the country. Additionally, "potential export losses" will result from price disadvantages, according to the source. The governor of the RBI said Addressing the media, RBI governor Sanjay Malhotra said India contributes more to global growth than the US, responding to Donald Trump’s recent remark dismissing the South Asian nation as a “dead” economy.
“We have a very robust growth rate,” Malhotra told reporters after a policy meeting on Wednesday.
“Compared to the United States, where the contribution is anticipated to be much lower at approximately 11% or something, our contribution is approximately 18%, which is greater. We are doing very well, and we will continue to further improve.”
Malhotra also cited the latest growth forecasts by the International Monetary Fund, which had estimated economic expansion of 6.4% for India and 1.9% for the US in 2025.
India's goods export to the US
India exported goods estimated at around $81 billion in 2024 to the US, including garments, pharmaceuticals, gems and jewelry, and petrochemicals, according to government data.
India's goods exports to the US constituted 2% of GDP in 2024. Its total goods exports globally were at $443 billion in 2024.
Two sources, citing the internal assessment, stated that the proposed tariffs on India's high-value exports face "erosion of price competitiveness, encountering intensified competition from countries subject to lower duties." (
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