On July 31, 2025, US President Donald Trump signed an executive order imposing a 25% reciprocal tariff on imports from India, effective August 1. Less than a week later, he added another 25% on select goods, pushing total tariffs on some items to as high as 50%—among the steepest for any US trade partner.
India’s continued import and resale of Russian oil, which Trump has criticised as showing support for Russia’s war in Ukraine, has been the key reason for the heavy tariffs. The Trump-Putin summit in Alaska held on August 15th was aimed at a possible end to the Ukraine war and gave India some hope around a possible relief from the tariff hike. While progress was made in other areas during the talks, India did not receive a categorical statement from the US President about reconsidering or withdrawing the new tariff rates.
Higher tariffs typically squeeze profits, but the pain is shared differently between exporters, importers, and consumers. Here’s how India’s export-oriented sectors are being affected—and which ones are hit hardest.
Understanding HTS rates and what Trump’s 2025 tariffs on India mean
In two separate Executive Orders over the past month, the US raised country-specific “reciprocal” duties on India. An Executive Order (EO) on July 31 2025 set a 25% country-specific reciprocal tariff for India, added on top of the normal US Harmonized Tariff Schedule (HTS) rate. A second action in early August imposed an additional 25% penalty tied to India’s purchases of Russian oil, bringing the total additional levy for many India-origin products to 50% on top of existing HTS duties.
The HTS rate is the import duty rate assigned to a product based on its classification in the Harmonized System (HS), a standardised international system for describing and coding goods. Every product that is traded internationally is given a unique HS code, set by the World Customs Organisation, an independent intergovernmental body headquartered in Brussels, Belgium.
Each HS code has an associated tariff rate in the importing country’s tariff schedule. The HTS rate is determined based on the national tariff schedule and the HS code classification. HTS codes assess duty rates, classify traded goods, and collect trade data in the United States and worldwide. Rates may vary depending on trade status—like General (normal trade relations), Special (free trade agreements), or Statutory (applied in specific cases).
In the United States, the Harmonized Tariff Schedule (HTS) is maintained by the US International Trade Commission (USITC) and enforced by US Customs and Border Protection (CBP). It establishes duty rates based on product codes: essentially, the percentage (or sometimes a fixed amount) of the product’s customs value that must be paid when importing.
These extra duties – 25% + 25% – are applied ad valorem (as a percentage of the product’s value) and are payable by importers — ultimately raising the landed cost of Indian exports to US buyers and often making some product lines commercially unviable.
How much more will importers and consumers have to pay for Indian goods in the US?
The new tariffs will impact and raise the cost of several exports, since it amounts to the MFN duty + the new tariff rate. MFN duty or Most-Favoured Nation duty is the standard tariff rate a country charges on imports from other WTO members or countries to whom it grants MFN status. Under the WTO’s MFN principle, a country must apply the same tariff rate to all trading partners with MFN status – no discrimination between them.
US Customs guidance confirms the new 50% surcharges are applied on top of existing normal MFN duties, which means almost all affected Indian goods now carry an extra 50% cost burden.
- Smartphones: Smartphones (HTS 8517.13.00) have traditionally been duty-free entering the U.S. An importer of $100,000 worth of Indian smartphones paid nothing in duties—until now. Post-tariff, the same cargo now carries a 50% surcharge, adding an estimated $50,000 in duties.
- Pharmaceuticals: Finished pharmaceuticals like medicaments under HTS 3004.90.92 also previously enjoyed 0% MFN duty, a vital advantage for U.S. access to affordable generics. Now, however, they’re hit with a 50% surcharge—meaning a $10 million shipment now garners an extra $5 million in tariffs.
- Gold, gems and jewellery: Loose diamonds (HTS 7102) were duty-free, while gold jewellery (HTS 7113) cumulative MFN tariffs of 5–7%. After the additions, diamonds now face 50%, and jewellery faces around 55–57% total duty—boosting a $5,000 necklace’s duty from $300 to nearly $2,800.
- Textiles and apparel: Cotton-knit T-shirts (HTS 6109.10) were already burdened with 16.5% MFN duty. With the added 50%, the total tariff jumps to a whopping 66.5%. For a $100,000 shipment, this means duties go from $16,500 to $66,500—a dramatic 4× increase.
- Carpets: Indian carpets under certain HS lines often carried low or zero MFNs; tufted carpets (HTS 5703) were taxed between 2–6%. Post-tariff, they now bear 52–56%, a heavy leap that may dampen U.S. demand for Indian handmade rugs.
- Furniture, bedding and mattresses: Wooden furniture (HTS 9403.60) was typically duty-free. Now, those imports face 50% additional duty. A $500,000 shipment of Indian-made bedroom sets now incurs $250,000 in new duties alone—radically altering the cost structure for U.S. retailers.
- Shrimp: Indian frozen warm water shrimp (HTS 0306.17) has historically been duty-free, but subject to AD/CVD duties. Now, adding 50% reciprocal tariffs over the base + any anti-dumping and countervailing duties means, for example, a 10% anti-dumping along with the latest tariff becomes a combined 60% duty before domestic shipping costs.
How this translates to exporters, importers and consumers
In a nutshell — about $48 billion of goods may be impacted by the new tariff rates if they come into effect by August 27th. For product lines with low or zero pre-existing duties like smartphones, many pharmaceuticals, and shrimp, the extra 25–50% percent tariffs are a huge rise — import duty literally becomes a big line item on invoices.
For products that already had duties above 10%, like apparel, the added duty compounds to create uncompetitive total tariffs (often >40–60%). Industry analysts warn that a 50% total added levy could make many exports to the US commercially unviable, as goods become more expensive overall.
Importers initially pay the duty at US customs. Some of that cost can be absorbed by exporters if they sell their goods to importers at a lower price. However, some of that cost may also be passed on to US retailers and consumers, making Indian products more expensive and denting margins for importers in the process. Another possible outcome is that importers may look to suppliers from other countries that have lower tariffs to avoid the margin hit; which is bad news for Indian exporters.
A possible resolution lies in bilateral trade negotiations, which have been ongoing for months. Assistant US Trade Representative Brendan Lynch was to lead the team for a sixth round of talks on a bilateral pact. The visit was originally set for August 25 to 29, but has been cancelled. This sixth round was meant to be a turning point, with the possibility of some reprieve from the new tariffs which take effect by August 27th. But with the cancellation and no new date announced so far, the prospects of early tariff relief seem dim.
Sources
IMEC: What are Harmonized Tariff Schedules (HTS) Codes?
USTR: Harmonized Tariff Schedule