Donald Trump's Tariffs: India May Lose Rs 8.57 Lakh Crore Worth Exports To Trade War

As the April 2, 2025 deadline nears, India is preparing for the potential impact of broad reciprocal tariffs from the United States. Emkay Global Financial Services, in a recent media webinar, projected that India could face a loss of up to $10 billion in exports to the US due to an anticipated 10-25 per cent tariff hike. The US government is expected to impose broad country-level tariffs rather than sector- or commodity-specific levies, given the complexities of value chain assessments.

Emkay Global estimates that India could lose approximately $6 billion (0.16 per cent of GDP ) in exports at a 10% tariff rate, with the figure soaring to $31 billion if tariffs reach 25%. India’s total exports to the US in FY24 stood at $77.5 billion, contributing 2.1 per cent to the GDP. While the auto, pharmaceutical, and electronics sectors appear resilient to the tariff shock, apparel and gems/jewelry industries are the most vulnerable.

Likely Scenario

According to Emkay Global, three possible scenarios for the US tariff implementation exist, one is broad country-level tariffs – the most likely and potentially the most damaging scenario, second possibility is sector-level tariffs – less probable and relatively less harmful, and third possibility is of commodity/sub-sector level tariffs – the least likely and the most complex to implement.

Given the challenges of evaluating sector-based or commodity-specific duties, Emkay Global’s Chief Economist, Madhavi Arora, stated, “We believe the broad sector-level reciprocal implementation is the most probable outcome on April 2, given complications around sector or commodity level tariff assessments across the value chains.”

Impact on Key Sectors
While India could be among the worst-hit nations under broad tariffs, certain industries are better placed than feared. The auto, pharmaceutical, and electronics sectors are expected to withstand the tariff pressures due to their relative insulation in the global trade network. However, apparel and gems/jewelry exports to the US remain at high risk, making them prime targets for negotiation strategies.

Emkay Global identified the most vulnerable sectors based on tariff exposure and dependency on the US market:

Auto, Pharma, Electronics – Limited impact due to supply chain insulation.
Gems/Jewelry, Apparel – Highly exposed and likely to bear the brunt of reciprocal duties.

India’s Strategy: ‘Easy Wins’ to Offset Tariff Pressure

The report suggests that India can navigate the tariff war by engaging in negotiations with the US and offering targeted concessions that are politically and economically significant for Washington but do not severely impact India’s domestic industry. The key 'easy wins' identified include:

Increasing energy imports (crude oil, natural gas) from the US

Expanding defense cooperation and purchases

Reducing tariffs on specific agricultural and food commodities

Lowering tariffs on foreign electric vehicles (EVs)

With President Donald Trump ’s deal-making approach, such concessions could help India mitigate the tariff impact while securing trade advantages in other areas.

Limited Opportunities in a Global Tariff War
Despite the broader US trade war targeting China, India’s gains from the shifting trade landscape remain limited. While some opportunities exist—such as exporting refined petroleum and auto components to North America—India has not significantly increased its market share in low-skill sectors vacated by China post-COVID. According to Emkay’s assessment, China dominates high-complexity exports (75%) compared to India (45%), leaving few immediate opportunities for India to benefit from tariff shifts on Mexico and Canada due to the deeply integrated North American supply chains.

Tariffs Won’t Be a Big Blow to India
While the upcoming US tariffs pose a challenge for India’s exports, Emkay Global remains cautiously optimistic about the outcome of trade negotiations. Madhavi Arora emphasized that India must work harder to gain market share in this evolving global trade landscape, but she also reassured that the impact on India’s economy will be manageable.

“At the end of it, our view is that the tariff will not be a big blow to India, as the negotiations will be fruitful, with a slight impact on overall Indian exports to the US,” Arora concluded.
With the tariff noise growing louder, India’s policymakers and industry leaders are bracing for a new phase in global trade dynamics, where strategic diplomacy and economic agility will play a crucial role in minimizing export losses and securing favorable trade terms.