Effective Friday, Indian goods exports to the US will face a 25% tariff plus an unspecified penalty after trade talks stalled and above that, clouding the country’s export prospects further at a time when it is struggling to ward off an economic slowdown.
Trump’s trade barriers to India
US president Donald Trump in a post to Truth Social on Wednesday justified the new trade barriers to India citing what he called India’s “far too high” tariffs and its “most strenuous and obnoxious non-monetary trade barriers.” Wednesday’s decision followed the failure of both sides to strike an interim trade deal before the August 1 deadline for countries to wrap up trade agreements with the US. The Trump administration announced unprecedented reciprocal tariffs against most countries on April 2 but has since paused them to facilitate bilateral deals.
Source: Financial Express
Following US President Donald Trump's announcement of a 25% tariff and unspecified penalty on Indian imports, India's Ministry of Commerce and Industry stated it's studying the implications and will take all steps to protect national interests, including farmers and MSMEs.
“India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months. We remain committed to that objective,” a statement by the ministry of commerce and industry said.
Source: Financial Express
Despite Donald Trump's claim that India is the "tariff king," data shows India's weighted average tariff on U.S. imports is under 5%. In contrast, the U.S. and other countries impose much higher duties on select products. Discrepancies in trade data are also under review by Indian commerce and revenue departments.
Source: The Economic Times
US President Donald Trump's new 25% tariff on Indian goods, coupled with an unspecified penalty for purchasing Russian oil, poses a significant fiscal challenge for India. US President Donald Trump on Wednesday announced a 25% tariff on India with additional penalties for buying Russian oil. While the size of the penalty is yet not known, any bid to avert it could come at a huge fiscal cost for India. Any cut in purchase of discounted oil from Russia would potentially increase the country’s oil import bill and widen its trade and current account deficits by significant margins. The task for the country is to choose between two negatives: a penalty on potentially all of its exports to the US and the costs of cutting Russian oil purchases.
Source: Financial Express
A recent SIDBI survey reveals that over half of Indian manufacturing and trading MSMEs experienced sales growth in Q1FY26, while service sector MSMEs reported stable or increased sales. Exporters, however, faced challenges due to tariff issues. Despite these concerns, the overall outlook remains positive, with strong business expectation indices for the coming year, although near-term uncertainty exists.
Source: The Economic Times
The India-UK Comprehensive Economic Trade Agreement (CETA) is expected to boost India's technical textile exports to the UK to $1 billion by 2030, from the current $240 million. The agreement grants 100% duty-free access for Indian exports, giving India a competitive advantage over China. MATEXIL will provide support to help Indian exporters capitalize on the opportunities.
Source: The Economic Times
Textile industries have been jolted by the United States' sudden announcement of a 25% tariff and penalty on Indian exports. The decision has disrupted ongoing business, with stakeholders expressing concern over blocked orders and halted production. The industry was expecting an extension of the tariff deadline, but the announcement has now cast uncertainty over trade commitments made earlier this year. It is going to hurt severely if the announced tariff and penalty come into force. The US is a key market for India's home textile exports, and the sudden tariff announcement has caught the industry off guard. Textile manufacturers from the city were hoping for better business opportunities with the US since there is already a higher tariff rate for China. "But now, with a 25 percent tariff and penalty, the situation has become challenging for Indian textile exporters as well. The countries where the tariff is lower are at an advantage," said Vijay Mevawala, former president, Southern Gujarat Chamber of Commerce and Industry (SGCCI).
Source: Times of India
Despite trade tensions with the United States during the first half of 2025, China managed to keep its textile and clothing exports stable, shipping $143 billion worth of goods — a slight increase of 0.8%. Breaking it down, clothing exports dipped by 0.2% to $73.5 billion, while textile exports rose by 1.8% to $70.52 billion. However, data from the China National Textile and Apparel Council (CNTAC) shows more variation when viewed month by month. In March, American buyers rushed to place early orders in anticipation of potential tariffs. This led to a 16.5% jump in textile exports and a 9.3% increase in clothing exports. The Trump administration formally announced the new tariffs on April 2. By April, clothing exports had slipped 0.5% year-over-year, while textile exports rose 3.4%. The half-year closed with a 1.1% increase in clothing exports and a 1.6% decline in textiles in June. Between April and May, Chinese textile and clothing exports to the U.S. fell by 20%. However, stronger demand from the European Union, Japan and South Korea helped balance out the losses.
Source: In Fashion Network
