A temporary reprieve: $30 billion in Indian exports escape Trump's 50 per cent tariff

New Delhi: US President Donald Trump announced on Wednesday a move to impose 50 per cent tariffs on imports from India. However, shipments worth more than $30 billion, including pharmaceuticals and certain electronic items such as smartphones, semiconductors, and energy products, remain safe for now as they are included in the current exemption list.

India’s exports of pharmaceuticals and electronics (primarily smartphones) amounted to $10.5 billion and $14.6 billion, respectively, in FY25, making up 29 per cent of its total exports to the US. Petroleum exports, valued at $4.09 billion in FY25, are also excluded from the fresh tariffs because energy products remain part of the exemptions. In FY25, India’s total exports to the US stood at $86.51 billion.

The new tariffs, which take effect in the next 21 days, do not yet cover these vital sectors. Consequently, India’s exports to the US have seen an uptick since January this year, largely due to these exemptions and the absence of duties on the affected goods. Between January and June 2025, the share of Indian merchandise exports to the US climbed from about 17-18 per cent to over 20 per cent. This growth was further buoyed by exporters front-loading shipments before the August tariff hike and by exemptions on smartphones and pharmaceuticals, which were spared the 10 per cent baseline duty introduced in April, industry experts noted.

Despite India’s overall exports rising by less than 2 per cent in Q1 FY26 and contracting by more than 4 per cent in Q4 FY25, exports to the US represented approximately 23 per cent of India’s total shipments in the June quarter of FY26 and the first quarter of FY25, according to Commerce Ministry data.

Risks persist, however, as Trump has threatened to raise tariffs on foreign-made drugs up to 200 per cent, and future US decisions could remove the exemption for smartphones. In Q1 FY26, India’s exports to the US totalled $25.52 billion, a rise of nearly 23 per cent year-on-year, with total two-way trade at $32.41 billion. For FY25 as a whole, trade between the two countries surpassed $86 billion, as per official data.

With input from IANS