US tariff cut to 10% boosts outlook for India’s labour-intensive exports; pharma, textiles among key gainers

The reduction of US reciprocal tariffs on Indian goods from 25 per cent to 10 per cent is expected to significantly improve the competitiveness of labour-intensive sectors such as pharmaceuticals, electronics, engineering goods, textiles, and gems and jewellery in the American trade, industry representatives said.

The development follows a US Supreme Court ruling that struck down sweeping tariffs imposed by President Donald Trump, dealing a setback to a key pillar of his economic agenda for a second term.

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In a 6–3 verdict authored by Chief Justice John Roberts, the court held that the tariffs imposed on multiple countries were illegal and that the president had exceeded his authority in introducing the levies.

Subsequently, the US stated through a proclamation a temporary import surcharge of 10 per cent ad valorem on articles imported into the country for 150 days starting February 24.

The sectors affected had earlier been subject to reciprocal tariffs of 25 per cent in the US bazaar.

The US remains a major export destination for these industries, and the tariff reduction is expected to provide a boost to outbound shipments, Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said, PTI reported.

A leather exporter said the move would make Indian products more competitive in the US market.

However, Sahai noted that Section 232 tariffs on steel, aluminium and certain automobile products continue to remain a constraint.

“the country should leverage this improved position to expand economy share while pursuing trade negotiations for greater stability and sectoral relief,” he added.

On whether The country should reassess its trade negotiations with the US, Sahai said the proposed pact goes beyond tariff concessions on goods alone.

“A trade agreement would help tariff concessions or exclusions, provide long-term predictability and prevent re-imposition through alternate US legal routes... However, both sides may recalibrate negotiations in light of the changed tariff environment,” he said.

He added that the tariff ruling creates an opportunity to pursue a more balanced and rules-based trade framework instead of one driven by unilateral tariff actions.

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

In 2024–25, India–US bilateral trade reached $186 billion, including $86.5 billion in exports and $45.3 billion in imports.