Trump's 25% Tariff Exempts Significant Indian Exports

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Trump’s 25% Tariff on India Excludes Pharmaceuticals, Energy, and Electronics

By S JHA

MUMBAI, August 1, 2025 — As the US moves ahead with its new 25% reciprocal tariff on Indian imports, a revised analysis by the Global Trade Research Initiative (GTRI) offers crucial clarification: India’s high-value exports in pharmaceuticals, energy, and electronics will be exempted from the hike.

The White House tariff schedule, announced by President Donald J. Trump, had initially caused alarm in Indian trade circles. However, GTRI’s amended assessment, released Friday, confirms that several strategic and sensitive product categories will not be subjected to the punitive duty.

According to GTRI, the following key export sectors from India are excluded from the 25% reciprocal tariff:

Pharmaceuticals:
- Finished pharmaceutical formulations
- Active Pharmaceutical Ingredients (APIs)
- Drug intermediates and key inputs
Energy Products:
- Crude oil, refined petroleum products, natural gas, coal, and electricity
Electronics and Semiconductors:
- Smartphones, computers, tablets, solid-state drives (SSDs)
- Flat panel displays, integrated circuits, and other critical digital hardware
Critical Minerals:
- Minerals essential to high-tech and clean energy manufacturing

This clarification brings relief to India’s pharma and tech sectors, which have significant trade relationships with the United States. The US is one of India’s largest pharmaceutical markets, and Indian generics play a key role in keeping US healthcare costs down. In FY2024-25, pharmaceutical exports to the US stood at over $7 billion.

Similarly, India is a major supplier of IT hardware and software-related electronics, especially in the post-pandemic surge in remote technologies.

Despite these exemptions, the 25% tariffs still apply to a wide range of Indian exports, particularly in textiles, engineering goods, chemicals, auto components, ceramics, and processed foods. Trade analysts suggest that these sectors may feel the brunt of US protectionist policy, especially those that directly compete with American manufacturers or have high export volumes.

“This is a calibrated strategy by the US — to hit areas where import substitution is possible while sparing sectors where America remains dependent on Indian supply chains,” a senior trade policy expert with GTRI explained.

The Indian government has yet to announce any formal retaliatory tariffs. However, officials from the Ministry of Commerce are reportedly in internal consultations, evaluating the legal and diplomatic options available under World Trade Organization (WTO) rules.

India is also expected to raise the issue through bilateral trade channels, especially in the upcoming India-US Strategic Trade Dialogue, which is now expected to take on added urgency.

The revised tariffs are part of President Trump’s broader push for reciprocal trade balances, announced earlier this year. India, which had previously enjoyed GSP (Generalized System of Preferences) status under Trump’s first term until its withdrawal in 2019, has been increasingly viewed through a transactional lens in the current administration’s trade calculus.

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