Exporters worried over Trump's tariff as US buyers either holding back or cancelling orders

Exporters are worried over the impact of the 25 per cent tariffs announced by the US from August 1 on Indian goods, as American buyers are either cancelling or holding back orders until there is a clarity on the penalty component of the announcement.

Federation of Indian Export Organisations (FIEO) President S C Ralhan said the industry is waiting for the US executive order to get a clear picture on the tariff and penalty.

US President Donald Trump on Wednesday announced the imposition of a 25 per cent tariff on all goods coming from India starting August 1, plus an unspecified penalty for buying Russian crude oil and military equipment.


"I have started receiving communication from my buyers for cancellation of orders. We are a bit worried," Ralhan, hand tool exporter from Ludhiana, said.

Expressing concern on the announcement, plastic product exporter Arvind Goenka said the sector is worried as India's competing nations such as Vietnam and Thailand are facing lower import duties than India.

"The penalty part is worrisome. If it will be imposed in addition to the 25 per cent, then buyers will stop placing orders," he said.

A leather and footwear exporter said these tariffs are going to have serious implications on India.

"US buyers are waiting for clarity. It is creating uncertainty. If the new tariffs will be imposed from August 1, about 60 per cent of orders will be cancelled," the exporter said.

The trading community is expressing hope that India and the US will soon finalise an interim trade deal as the pact would help remove this 25 per cent tariff and penalty.

During 2021-25, the US was India's largest trading partner. The US accounts for about 18 per cent of India's total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade.

With America, India had a trade surplus (the difference between imports and exports) of USD 35.32 billion in goods in 2023-24. It was USD 41 billion in 2024-25 and USD 27.7 billion in 2022-23.

In 2024-25, bilateral trade between India and the US reached USD 186 billion (exports USD 86.5 billion and imports USD 45.3 billion).

In services, India exported an estimated USD 28.7 billion and imported USD 25.5 billion, adding a USD 3.2 billion surplus. Altogether, India ran a total trade surplus of about USD 44.4 billion with the US.

In 2024, India's main exports to the US included drug formulations and biologicals (USD 8.1 billion), telecom instruments (USD 6.5 billion), precious and semi-precious stones (USD 5.3 billion), petroleum products (USD 4.1 billion), vehicle and auto components (USD 2.8 billion), gold and other precious metal jewellery (USD 3.2 billion), ready-made garments of cotton, including accessories (USD 2.8 billion), and products of iron and steel (USD 2.7 billion).

Imports included crude oil (USD 4.5 billion), petroleum products (USD 3.6 billion), coal, coke (USD 3.4 billion), cut and polished diamonds (USD 2.6 billion), electric machinery (USD 1.4 billion), aircraft, spacecraft and parts (USD 1.3 billion), and gold (USD 1.3 billion).

Of the USD 45 billion worth of exports from the US, USD 20 billion came from just few items -- petroleum, coal, petroleum coke, diamonds, gold and scrap materials.