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New tariffs could disrupt US access to cheap generic drugs and critical auto parts from India as well.
A visitor shops at a jewelry vendor at the Jacob Javits Convention Center in New York City, US. (IMAGE: REUTERS)
US President Donald Trump on Wednesday announced a 25% tariff on Indian imports starting August 1, a move that is expected to raise prices for American consumers across key sectors such as smartphones, textiles, auto parts and jewellery. The announcement, made on Truth Social, cites India’s “high tariffs” and “non-monetary trade barriers,” though analysts say the move could backfire for the US economy.
“India is our friend,” Trump wrote, “but we have done relatively little business with them because their tariffs are far too high… and they have the most strenuous and obnoxious non‑monetary trade barriers of any country.”
According to a Reuters report, India is a major supplier to the US in segments like smartphones, automotive components, cut and polished diamonds, ready-made garments, and pharmaceuticals. American companies and consumers will now likely face steeper costs across these essential categories.
A recent analysis by Counterpoint Research highlights that India has become a global manufacturing hub for smartphones. Many of the mid-range Android phones and even components for US brands like Apple are assembled in India.
A 25% tariff on such imports will inevitably increase prices for US consumers, who are already battling inflation. Yale’s Budget Lab and the Associated Press forecasts apparel prices could rise 17% under the full tariff regime, even after substitution effects.
Indian Exports To US
| Products | Total export to US inFY2023-24(USD bn) | 2024 tariffs (%) |
| Machinery and Electrical Equipment | 17.2 | 0.6 |
| Jewellery/diamond etc. | 9.9 | 24 |
| Textiles and Textile Articles | 9.6 | 9.0 |
| Pharma | 8.1 | 0.0 |
| Mineral Products | 6.0 | 6.4 |
| Basic Metals | 5.1 | 2.2 |
| Chemicals (Excluding Pharma) | 4.8 | 2.5 |
| Transportation (Excluding Air) | 2.8 | 1.8 |
| Misc | 2.6 | 0.9 |
| Plastics/Rubbers | 2.4 | 3.3 |
| Animal and Animal Products | 2.1 | 0.6 |
| Vegetable Products | 1.8 | 3.6 |
| Stone/Glass | 1.5 | 4.0 |
| Foodstuffs | 1.4 | 14.6 |
| Raw Hides, Skins, Leather and Furs | 0.7 | 7.7 |
| Wood and Wood Products | 0.7 | 1.4 |
| Aircraft | 0.5 | 1.8 |
| Footwear and Headgear | 0.4 | 5.8 |
| Total exports | 77.5 | 2.8 |
| SOURCE: Prashant Nair, CNBC-TV18 | ||
India supplies nearly 40% of the generic drugs used in the United States, according to the US Food and Drug Administration (FDA). These include vital medications for cancer, diabetes, heart conditions and infectious diseases. According to a report by The New York Times, tariffs on Indian generics could increase prescription drug costs for American patients and hospitals.
India exported $2.2 billion worth of auto parts to the US in 2023, according to the Auto Component Manufacturers Association of India (ACMA). These include engine parts, brakes, gear assemblies and wiring harnesses.
Reports in The Economic Times and Business Standard say that American auto manufacturers depend on Indian components to keep production costs low. A 25% tariff could raise car repair costs and disrupt assembly lines.
Shankhyaneel Sarkar is a senior subeditor at News18. He covers international affairs, where he focuses on breaking news to in-depth analyses. He has over five years of experience during which he has covered sev…Read More
Shankhyaneel Sarkar is a senior subeditor at News18. He covers international affairs, where he focuses on breaking news to in-depth analyses. He has over five years of experience during which he has covered sev… Read More
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