There has been havoc all over the world since the announcement of the reciprocal tariffs on over 40 countries announced by Uncle Sam on 2nd April ‘25. These are country specific tariffs that range from 10% on countries like Brazil and UK and go upto 49% for Cambodia and Madagascar. This has been in response to what Trump calls as injustice towards American exporters. There are potential threats of trade wars all over the world. Some countries are reacting aggressively , while some are taking a diplomatic stand to maintain reasonable relations. 

India has been recently charged with a “discounted” tariff of 26% on its exports to the USA. This high tariff rate will adversely affect the Indian economy in the years to come. According to the data from the Ministry of Commerce, the top 5 products exported to the USA in the year 2023-24 included engineering goods, electronic goods gems and jewellery, drugs and pharmaceuticals and petroleum products. These 5 products compose 67% of total exports to the USA , followed by the rest. Owing to this data , the sectors that will be highly affected are engineering goods , electronics , gems and jewellery and textiles. Steel, aluminium and auto related products will continue facing a 25% tariff as declared earlier. 

But there is a ray of positivity here too. According to the fact sheet by whitehouse , pharmaceuticals industry , copper , semiconductors and lumber articles will be , for the time being, be exempted from this tariff. This is a major relief for the pharma industry , as India exports $5.83 billion worth of goods to the USA , which is almost 31.37% of India’s total pharmaceutical exports . With the semiconductor industry in India still growing and its exports slowly beginning to increase , the USA was India’s highest export market in 2022-23 , with an export value of $1.68 billion.  No tariff on semiconductor export to the USA will continue to boost growth of this sector in India with a presence of a reliable export market in the form of the USA. 

Apart from this , the USA has levied heavier tariffs than India on many Asian economies. Indian Cellular and Electronics Association (ICAE) has explained that the economies that India competes with for electronics exports are China , Vietnam , Thailand and Indonesia.  The tariffs imposed on these countries by the USA are 34%, 46% , 36% and 32% respectively. This opens up an opportunity for Indian exporters to increase their influence in the USA import market. This is true for the textile markets too. With respect to textiles , India mainly competes with south asian economies like Vietnam , Bangladesh , Cambodia , Pakistan and China. India faces lower tariffs from the US than all of these countries. Thus this puts India in a better place than all its south-asian competitors . This is important for India as the USA is one of the largest buyers of Indian textiles and now it is expected to grow even more. 

Thus , we can say that though these reciprocal tariffs will affect many sectors of the Indian economy adversely , there are few industries that may gain comparative advantage for the same. Also , few industries can continue expanding their export market in the United States as they are yet to face any tariffs from Uncle Sam ! So , ultimately we can say that this dark cloud has a silver lining too !!