International Trade and American Tariff: An Economic Analysis Special Reference to India

Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-10(II)| October2025 195 International Trade and American Tariff: An Economic Analysis Special Reference to India Dr.G.S.Pattebahadur M.A. Eco,B.Ed,NET,SET,Ph.DAssociate Professor Balasaheb Desai College, Patan, Dist.Satara Email-gpattebah[email protected] Manuscript ID: JRD -2025-171046 ISSN: 2230-9578 Volume 17 Issue 10(II) Pp. 195-198 October 2025 Submitted: 20 Oct. 2025 Revised: 26 Oct. 2025 Accepted: 27 Oct. 2025 Published: 31 Oct. 2025 Abstract International trade plays a key role in global economic growth. The use of taxes on imported goods is an important tool in international trade. The United States of America (USA) often uses tariffs to protect domestic industries and address trade imbalances. The effects of these tariffs are felt globally, including in India and developing countries. On 27 August 2025, USA tariffs on India were increased to 50% by the directive of President Donald Trump, affecting more than half of India's exports to the USA. These Indian tariffs on goods going to the USA target sectors such as textiles, gems, jewelry and leather, raising concerns about the economic impact. This research paper focuses on various aspects of international trade and USA tariffs, with a special focus on economic analysis of India. Keywords: Trade, Tariff, USA Introduction: The United State of America (USA) and India have maintained a strong and expanding trade partnership. The trade between the two countries has reached record levels in recent years. The USA has imposed a 50% tariff on India, which is affecting key exports such as textiles, gems and auto parts. India has imposed tariffs on US goods. India’s tariffs on USA exports are related to the 50% tariffs imposed by the USA government on various Indian goods in 2025. These tariffs were the highest ever imposed by the USA on India. These high tariffs are having an economic impact. As a result, their $87 billion worth of exports to the USA are at risk. This has strained relations between the two countries. This paper focuses on various aspects of international trade and American tariffs, which are of particular relevance to economic analysis for India. Objectives of the research paper: 1) To study the various aspects of International trade 2) To review of American Tariff an economic analysis of India. Research Methodology: The information in the research paper is collected from secondary sources included various references book, research paper, Government report, journal, periodicals, websites and online sources etc. related international trade and American Tariff. International Trade India’s major exports to the USA include pharmaceuticals, precious stones and jewelry, electrical machinery and mechanical appliances. The USA remains India’s largest goods trading partner accounting for nearly 11% of India’s total trade. Both nations continue trade talks to reduce Quick Response Code: Website: https://jrdrvb.org/ DOI: Creative Commons (CC BY-NC-SA 4.0) This is an open access journal, and articles are distributed under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International Public License, which allows others to remix, tweak, and build upon the work noncommercially, as long as appropriate credit is given and the new creations ae licensed under the idential terms. Address for correspondence: Dr.G.S.Pattebahadur,M.A. Eco,B.Ed,NET,SET,Ph.D,Associate Professor,Balasaheb Desai College, Patan, Dist.Satara How to cite this article: G.S.Pattebahadur,(2025 ), International Trade and American Tariff: An Economic Analysis Special Reference to India,Journal of Research & Development, 17(10(II)),195-198 Original Article Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-10(II)| October2025 196 tariffs and enhance market access for key products such as spirits, motorcycles, and industrial machinery. American Tariff Policy USA tariff Implementation Dates on Indian Goods are following Date Event Tariff Announcement 02/04/2025 Announcement of reciprocal tariffs The US announced a 26% tariff on Indian goods later adjusted to 25% 05/04/2025 Baseline tariff effective A 10 % baseline tariff on all imports including India was implemented 09/04/2025 Delay of nation specific tariffs The 16% nation specific tariff for India was delayed for 90 days until July 9 08/07/2025 Extension of delay The delay period for nation specific tariffs extended to August 1 30/07/2025 Announcement of 25% tariff plus penalty The US declared to 25% tariff on Indian goods, effective August 7, with an unspecified penalty for Russian oil purchases 01/08/2025 Initial 25% tariff effective 25% tariff (10% baseline + 15% reciprocal) applied to Indian goods 07/04/2025 Executive order for 25% tariff implementation The white house issued an executive order confirming a 25% tariff on Indian goods, effective immediately with exemptions for pharmaceuticals electronics and energy 27/08/2025 An additional 25% tariff is effective An additional 25% tariff was implemented bringing the total to 50% for most Indian goods(except exempted sectors) 05/10/2025 Grace period for in transit goods Goods loaded onto ships before August 7 and arriving before October 5 are subject to the earlier 25% tariff rate not the 50% rate India-United State of America Trade Relation The United States and India maintain a strong and expanding trade partnership, with commerce between the two nations reaching record levels in recent years. 1. Bilateral goods trade between the two countries stood at around USD 129.2 billion in 2024. 2. The USA recorded a trade deficit of approximately USD 45.7 billion with India. 3. India’s major exports to the USA include pharmaceuticals, precious stones, jewelry, electrical machinery and mechanical appliances. 4. The USA remains India’s largest goods trading partner, accounting for nearly 11% of India’s total trade. 5. Both nations continue trade talks to reduce tariffs and enhance market access for key products such as spirits, motorcycles and industrial machinery. Affected Sector by American tariffs The following sectors in India have been affected by American tariffs. 1. Textile and apparel sector The USA imposes a 50% tariff on textile and apparel, making them less competitive in the US market. 2. Gems and jewelry sector The USA is imposing a 50% tariff on gems and jewelry, resulting in a 59.5% decline in exports. The gems and jewelry sector is the worst hit by this tax. Many exporters have reported a decline in turnover of up to 50%. 3. Leather and footwear sector The leather and footwear sector has been affected by the USA tariffs. These are policies that are affecting the competitiveness of Indian exporters. 4. Marine products sector The USA tariffs have affected the marine products sector. The significant tariffs have been imposed on exports of marine products. 5. Chemicals sector The USA tariffs have affected the chemicals sector. The chemicals sector is facing a decline in exports due to the tariffs. Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-10(II)| October2025 197 6. Automobile components The automobile components sector accounts for over 55% of India's exports to the USA, making them vulnerable to tariff hikes. Impact of USA Tariffs on India 1. Export decline: India's exports to the USA have fallen by 37.5% between May and September 2025 due to USA tariffs. This has led to a significant decline in sectors such as textiles, gems and jewelry. India's exports have declined significantly due to the tariffs imposed by the USA. In particular, industries such as gems and jewelry and garments have been hit. 2. GDP growth: USA tariffs may reduce India's GDP growth by 0.3-0.5%, the estimate may be reduced from 6.5% to 6%. 3. Impact on business and employment: The Labor-intensive sectors such as textiles and gems and jewelry may lose jobs due to reduced competitiveness due to USA tariffs. Employment opportunities are also likely to be affected as some industries are hit hard. 4. Economic instability: The increased tariffs due to USA tariffs have weakened the Indian rupee. This has created economic uncertainty. 5. Strain on trade relations American tariff policy has created tension in trade relations between India and the United States. 6.Stock Market Reaction to Tariff Announcement The tariff shock has triggered a broad market correction, especially in export-linked sectors, while defensives like pharmaceuticals and IT remain resilient. The Nifty Pharma Index has gained over 3% since August, supported by tariff exemptions and stronger export orders to the US. IT Services insulated from trade exposure, these sectors continue to attract domestic and institutional investors.The Sensex and Nifty have corrected around 2.8% month-on-month. The Indian Rupee is trading near a record low of Rs. 88.78 per USD as investors’ price in trade and inflation risks. Tariff-related measures India has taken some measures regarding tariffs 1. Increasing exports to other markets: India is exploring new markets and trade agreements to reduce its dependence on the USA. To counter the USA tariffs, India has increased exports to other countries such as Europe, the Middle East and Africa. This has led to a 9% increase in exports in July-September. 2. Bilateral trade agreements: The Government of India is committed to a bilateral trade agreement, with a deadline of autumn 2025 for negotiations. India is in diplomatic talks with the USA to resolve this issue. Bilateral trade agreements are being discussed between the USA and India to further strengthen trade relations. 3. Focus on structural reforms: India has focused on structural reforms in its economy to counter the tariffs. 4. Domestic resilience: Prime Minister Hon’ble Narendra Modi has encouraged local manufacturing to cope with global demand shocks. 5. Abandoning protectionist policies: The emphasis is on accelerating efforts to diversify trade partners outside the USA and strengthen ties with global. 7. Raising voice internationally: India can complain about USA tariff policies at the World Trade Organization (WTO). Exempted Sectors Some sectors are exempted from USA tariffs. These exemptions protect India's strategic exports, particularly its generic drug industry, which supplies nearly 50% of the USA drug market. These exempted sectors include 1. Pharmaceuticals 2. Semiconductors 3. Energy Resources 4. Critical Minerals, etc. Conclusion The research paper concludes that USA tariffs have had a negative impact on India's exports. India has tried to address this challenge by focusing on other markets and entering into bilateral agreements. The Indian stock market has been experiencing volatility after the USA imposed tariffs on India. India has not yet announced any retaliatory tariffs on USA goods but reserves the right to take action through the WTO mechanism. Although India's tariffs on USA products remain unchanged until October 2025, the government is assessing reciprocal options if trade talks fail. The Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-10(II)| October2025 198 USA has imposed a 50% tariff on Indian goods, which has significantly affected various sectors. The USA - India tariff dispute is having an economic impact on trade flows, supply chains and components of the economy. References 1) H.U.Faulkner, (1959), American Economic History, Universal Book Stall, Delhi. 2) T.B.Desai, (1971), Economic History of the Great Powers, K.K.Vora and Co, Publisher PVT, Ltd, Bombay 3) Datt & Sundharam (2018). Indian Economy, S Chand and Company Limited, New Delhi. 4) P.L.Bhandarkar, T.S.Wilkinson, (2010), Methodology and Techniques of Social Research, Himalaya Publishing House. 5) Economic & Political weekly-July 12, 2025, Vol LX No.28 6) Economic & Political weekly-September 27, 2025, Vol LX No.29 7) www.hindustantimes.com 8) The Hindu-September 17, 2025 9) The Hindu-September 24, 2025