Trump Tariffs, India’s EXIM Prospects & Retaliation

Since Donald Trump, the current President of the USA took office, he is on the news every single day with surprise announcements. On 2nd April 2025, fresh tariffs were imposed on a list of countries that the USA termed as worst offenders. China, Lesotho, Cambodia, Laos, Myanmar, Sri Lanka, Vietnam, Bangladesh, Taiwan, Madagascar are the countries with high tariffs. India too finds its place too with a 26 per cent hike in tariffs.

Some of the industries that might get affected due to this are electronics, gems & jewelry, IT & software services, etc. But does this mean India’s growth prospects have been shunned? And does it mean India will retaliate with higher tariffs? And what what happened when the USA imposed heavy tariffs in 1930? Let us explore.

Which countries are affected the worst and the least?

China faces a 34 per cent tariff, increasing to 54 per cent with additional fentanyl-related duties. But for the fentanyl-duties imposed on China, Lesotho tops the list with a 50 per cent tariff and is the worst hit of all.

The third highest of all is that of Cambodia, which faces a 49 per cent tariff on its exports to the U.S., the highest rate imposed. And its neighbouring nation of Laos is set to face a 48 per cent tariff. Vietnam is subject to a 46 per cent tariff, which is one of the highest. While Sri Lanka is subject to a 44 per cent tariff, it is notable that it is a major apparel exporter to the USA. Nearly 38 per cent of Cambodia’s exports are to the USA and is all set to hinder export-led growth. The African island nation of Madagascar too never escaped the tariff slap of the USA, which is now facing 37 per cent tariffs.

China’s hostile neighbour Taiwan faced 32 per cent tariff while Thailand too faced one of the highest tariff i.e., 36 per cent.

India, which restructured customs tariffs recently (apparently for the sake of American MNCs) is now slapped with a 26 per cent tariff. Japan, which is the second largest trade partner, is now facing 24 per cent tariffs. And its North Asian neighbour South Korea faces 25 per cent.

The least affected of the lot is going to be the European Union with a 20 per cent tariff. And the Philippines, with 19 per cent followed by Singapore, Australia, Chile, and other countries with only 10 per cent tariffs. Canada and Mexico were exempted from this list, and so were Russia, North Korea and other hostile nations.

How much damage to India?

Gems and jewelry, which accounts for nearly $9 billion of exports. The electronics industry with $14 billion exports will be the worst hit of all. While it is announced that auto parts and aluminium will not face fresh tariffs as they already attract 25 per cent tariffs. Fortunately, energy and pharmaceutical exports from India is exempted from the list.

In order to lower the impact, India bought 244,000 barrels of crude oil from the USA on March 2025, which was a 67 per cent increase. However, none of it paid off. Since the announcement, Sensex tanked almost 800 points and in the coming days it could lead to lower investor confidence.

Response from Indian business leaders

Sanjay Kumar, CEO & MD, Rassense Pvt Ltd says, “The 26% tariff hike imposed by the United States on India should be seen through a broader lens. While it is evident that such a move will have an inflationary effect within the United States, the more critical consideration lies in assessing its implications for India. For India, this situation could potentially be a blessing in disguise. On a global scale, India’s tariff structures are relatively moderate. Having said that, the global trade environment is highly competitive, and given that these new tariffs affect a broad range of countries, especially those that directly compete with India in sectors such as textiles and automotive components, India stands to gain more in the short term than it loses.”

Samrath Singh Kochar, Founder and CEO, Trontek says, “The U.S. tariffs on Indian auto exports might seem like a challenge only for automakers, but the ripple effect will impact the entire EV ecosystem—including battery manufacturers like Trontek. A decline in Indian auto exports could slow production for key manufacturers, affecting the demand for critical components like EV batteries. Additionally, if tariffs extend to EV parts, battery exports could face added cost pressures.”

Nikhil Anand Khurana, MD and CEO, Folks Motor, says, “India exported $2.2 billion worth of auto components to the U.S. in 2024, representing 29.1 per cent of India’s global auto parts exports, making it one of the key markets for Indian automakers. A 25 per cent tariff hike on auto imports could significantly increase costs for Indian vehicles and components, making them less competitive in the U.S. market. While this presents an immediate challenge, it also signals the need for a strategic shift in India’s automotive export strategy.”

Akshay Shekhar, CEO & Co-Founder of Kazam, says, “The U.S. tariffs on Indian auto exports will likely have some impact on the broader ecosystem but will not directly affect EV charging infrastructure. However, as automakers navigate export challenges, they may explore partnerships in other countries, an opportunity that could strengthen India’s position as a global manufacturing hub. This new change also reinforces the importance of Production-Linked Incentives (PLI) and Make in India initiatives, fostering self-reliant value chains and boosting domestic capabilities. While there may be disruptions in hardware supply chains, the software side of the energy transition remains firmly on track. India is not just adopting EV technology; we are building the digital backbone of global energy solutions.”

Last time when USA imposed tariffs

The Smoot-Hawley Tariff Act in 1930 was enacted to protect the interests of farmers and local businesses from foreign competition. European nations retaliated with similar tariffs, and a dent in international trade was visibly seen. Some also believe that it is the reason for the Great Depression too.

In conclusion

Response has been mixed from different countries. The European Union is eyeing countermeasures, and China too joins the club. However, the UK, which was expecting 20 per cent is now relieved as the US has only imposed 10 per cent. South Korea is prepping up to face the scenario as its auto industry is set to take the plunge. In short, this is leading to a global trade war between the USA and other countries. On the contrary, USA could pull back some of the announcements too owing to global outrage.