US Tariffs On India: How It Could Benefit Other Countries Like Vietnam, Bangladesh, And Mexico

US President Donald Trump’s announcement of a 25% tariff on Indian exports and secondary sanctions from August 1 has raised alarm across trade and policy circles, with experts warning that it could erode India’s competitiveness and open the door for rivals like Vietnam, Bangladesh, and Mexico.

CA Gaurav Makhijani of Rödl & Partner India cautioned, “With an additional penalty looming, India risks losing market share in labour-intensive sectors like garments and leather to Vietnam and Bangladesh, which enjoy preferential US trade terms.” He urged India to negotiate reciprocal access for US products such as automobiles and premium spirits, similar to concessions granted under its trade pact with the UK.

India's average tariff of 39% on agricultural products, compared to Vietnam’s 5% and China’s 3%, has long been a sticking point in talks. While the US has pressed India to lower these rates, New Delhi has refused to open politically sensitive areas such as dairy and agriculture.

Also Read: US Tariffs: How Reliance, Sun Pharma and Others Could Be Impacted

Experts argue that India must urgently diversify export markets to reduce dependence on the US, which currently absorbs nearly one-fifth of its exports. Accelerating the proposed Free Trade Agreement with the EU, analysts say, could provide alternate access to developed economies. “FTAs with the EU and UK can serve as critical hedges,” Makhijani added.

Trade policy expert Agneshwar Sen of EY India termed the US decision “an unfortunate development” but stressed that negotiations remain active, with a US trade team visiting India in August. He expects a comprehensive trade agreement by late 2025.

Meanwhile, India’s corporate exporters—led by Reliance, Sun Pharma, Hindalco, and Dixon Technologies—face immediate uncertainty. Reliance alone exported billions in petrochemicals and refined fuels to the US last year, while Sun Pharma depends heavily on the American market for generic drugs.

Economists believe the standoff underscores a larger shift in US trade policy under Trump’s “Liberation Day” strategy, aimed at forcing reciprocity through aggressive tariffs. In 2024, India exported $87 billion to the US but imported just $42 billion, leaving a $45.7 billion trade surplus—a gap that has drawn Trump’s ire.

While India has positioned itself as a key US strategic partner in Asia, its continued oil purchases from Russia and refusal to align fully with Western sanctions have added friction.

To counter this, analysts urge New Delhi to leverage strategic diplomacy, including its role in counterbalancing China and its position as a major defence buyer. However, time is running out, with the August 1 tariff deadline set to test India’s export resilience.