India Still Breathes Easy: 30% of Key Exports Unaffected by Trump’s New Tariff Hit

July 31, 2025: In what could be considered as a silver lining in the ongoing tariff tussle between India and the United States, after Trump’s announcement of levying 25% ‘reciprocal’ duties on Indian goods, over $25 billion worth of exports remain unaffected from the higher levies. This is due to the key exemptions for key sectors, including pharma, smartphones and select electronics.

This implies that more than 30% of the Indian exports (out of an estimated $80 billion per year, based on 2024 estimates) are not affected by the higher tariffs recently announced by the US President.

The pharma and electronics export to the US in FY25 amounted to $10.5 billion and $14.6 billion (approx 30% of the total exports to the US). It is worth noting that the recent rise in exports to the US was not purely driven by exporters front-loading shipments ahead of upcoming tariffs, but largely due to the exemptions provided to the key sectors (like pharma and electronics) from the 10% baseline levy. The sectors will stay out of the purview of the newly imposed 25% ‘reciprocal’ tariffs.

Rise in India’s Export Share to the US

The exclusion has had a notable impact. The share of Indian exports to the US rose to over 20% from January to June 2025, compared to the previous trend of 17–18%. During the June quarter of FY26, this share climbed to approximately 23%, supported by strong demand for smartphones and pharmaceuticals, unaffected by tariffs.

Broader Trade Risks Still Linger

While these sectors remain insulated, uncertainties persist. Trump has hinted at future tariff hikes up to 200% on foreign-made drugs, and the exemption for smartphones could also be withdrawn at any time, depending on the administration’s decisions.

Additionally, India’s $4.09 billion in petroleum exports are currently protected under the exemption list, but this too could be revisited. Trump has threatened unspecified penalties on India linked to its energy and defence trade with Russia, citing geopolitical concerns and India’s alignment with BRICS.

US Remains India’s Top Trade Partner

India’s exports to the US touched $25.52 billion in April-June FY26, growing 23% year-on-year. Bilateral trade stood at $32.41 billion in Q1 FY26, reinforcing the US’s status as India’s largest export destination and fourth-largest import source. It remains to be seen how the tariff negotiations materialise.

As trade negotiations continue and new penalties loom, India’s strategic sectors like pharmaceuticals, electronics, and energy are currently enjoying a critical window of tariff relief — a key advantage amid an otherwise tense trade backdrop.

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