“The imposition of higher tariffs by the U.S. will significantly impact the Micro, Small and Medium Enterprise (MSME) sector, which accounts for around 45% of India’s exports, while MSMEs in textiles, diamonds and chemicals are likely to be the most hit,” a report by CRISIL Intelligence said.

“The U.S. levies ad valorem duty of 25% on Indian goods. However, it has imposed an additional 25% tariff which will be effective from August 27 this year. This brings the total tariffs to 50%, which will have a meaningful impact on several sectors in India,” the report said.

“Textiles, gems and jewellery, which account for 25% of India’s exports to the U.S., are likely to be most affected. The MSMEs have more than 70% share in these sectors and will be hit hard,” the report said. Another sector which is likely to face the heat is chemicals, where MSMEs have a 40% share.

“The gems and jewellery sector at Surat in Gujarat, which dominates diamond exports, will feel the tariff shock,” the report said. “Diamonds account for more than 50% of the country’s gems and jewellery exports, and the U.S. is a major consumer,” according to the report.

In chemicals too, India faces competition from Japan and South Korea which are subject to lower tariffs. In steel, the U.S. tariffs are expected to have a negligible impact on the MSMEs as the units are mostly engaged in re-rolling and long products. The U.S. primarily imports flat products from India.

In the textiles sector, the ready-made garments are expected to lose ground in the U.S. compared to peers including Bangladesh and Vietnam which face lower tariffs.

White House Press Secretary Karoline Leavitt on Tuesday (August 19, 2025) said that U.S. President Donald Trump has imposed sanctions on India to bring an end to the Russia-Ukraine war.

“The President has put tremendous public pressure to bring this war to a close. He has taken actions as you seen sanctions on India and other actions as well. He has made himself very clear that he wants to see this war end,” she added.

Earlier, U.S. Treasury Secretary Scott Bessent on Tuesday (August 19, 2025) accused India of “profiteering” by reselling Russian oil while sparing China for the same, saying it has “diversified inputs of their oil.”

The remarks came amid strain in India-U.S. relations after Mr. Trump imposed tariffs totalling 50% on India. This includes 25% for New Delhi’s purchases of Russian oil that will come into effect from August 27.

Also read: 50% tariffs on Indian exports to the U.S. will reduce demand ‘very substantially’: Moody’s Analytics

While replying to a question on CNBC on the different treatment of China and India for purchasing Russian oil, Mr. Bessent said China’s oil imports from Russia have increased only 3% post the Russia-Ukraine war, while India’s oil imports from Russia have increased over 40%.

“China’s importing (Russian oil) is suboptimal. If you go back and look pre- 2022, pre-invasion (of Ukraine by Russia), 13% of China’s oil was already coming from Russia; now it’s 16%, so China has diversified inputs of their oil,” said Mr. Bessent.

Mr. Bessent added that “less than one per cent” of Indian oil was coming from Russia pre-invasion “and now I believe it’s up to 42%”.

“India is just profiteering; they are reselling… They made 16 billion in excess profits… some of the richest families in India. This is a completely different thing,” added Bessent. He further said that this “Indian arbitrage, buying cheap oil and reselling it as a product, has just sprung up during the war… is just unacceptable.”

Mr. Bessent made similar comments last week ahead of the Trump-Putin meeting. In an interview with Bloomberg, he said if “things don’t go well” between Trump and Putin at the summit meeting, then secondary sanctions on India for purchasing Russian oil could go up.

India has called the tariffs “unjustified and unreasonable”.

Trump ended India-Pakistan conflict, says White House

The White House claimed that Mr. Trump has ended the military conflict between India and Pakistan.

“The President is using the might of American strength to demand that respect from our allies, our friends, and our adversaries all around the world,” Ms. Leavitt said at a press briefing.

She said that it was seen not only in the progress with Russia and Ukraine but also “in the closing of seven global conflicts around the world”.

“We’ve seen it with the end of the conflict between India and Pakistan, which could have resulted in a nuclear war if we had not had a President who believed in the strength and the leverage that comes with the job of being the President of the United States of America,” Ms. Leavitt said.

In an answer to another question, Ms. Leavitt said that Mr. Trump used trade “in a very powerful way as leverage” to bring the India-Pakistan conflict to an end.

Also read: Trump ended conflicts including India-Pakistan, should get Nobel Peace Prize: White House Press Secretary

Since May 10, when Mr. Trump announced on social media that India and Pakistan had agreed to a “full and immediate” ceasefire after a “long night” of talks mediated by Washington, he has repeated his claim over 40 times that he “helped settle” the tensions between India and Pakistan.

India has been consistently maintaining that the understanding on cessation of hostilities with Pakistan was reached following direct talks between the Directors General of Military Operations (DGMOs) of the two militaries.

Prime Minister Narendra Modi has said in Parliament that no leader of any country asked India to stop Operation Sindoor.

India has recommended a three-year import tariff of 11%-12% on some steel products to curb shipments from top producer China.

The levy, if imposed, will start at 12%. It will be eased to 11.5% in the second year and to 11% in the third year, the Directorate General of Trade Remedies (DGTR) said in a notification dated August 16.

“The Authority concludes that there is a recent, sudden, sharp and significant increase in imports,” the notification said, adding that this could cause serious injury to the domestic steel sector.

The DGTR also said that due to 50% tariffs on steel imports into the U.S., coupled with similar measures by other countries, a bulk of steel volumes are lying with manufacturers across the world.

“Therefore, the safeguard duty must address, not only the serious injury suffered by the domestic industry…but also the threat of serious injury that is likely to arise in the future.”

The final recommendation follows preliminary findings, after which the Indian government in April imposed a 12% temporary tariff for 200 days

Earlier on Monday, Japanese steel lobby groups said they have requested the early introduction of measures to prevent the evasion of anti-dumping tariffs aimed at protecting their domestic sector from unfair imports.

U.S. President Donald Trump’s import tariffs on steel have fuelled a wave of trade frictions against Chinese steel, with countries including South Korea and Vietnam imposing anti-dumping levy.

The combined 50% tariff on Indian exports to the U.S. will reduce demand for Indian goods “very substantially”, Moody’s Analytics said in a report. 

The report was talking about the combined effect of the ongoing 25% tariff on Indian imports imposed by U.S. President Donald Trump, as well as the secondary tariff of 25% he imposed for India’s economic dealings with Russia, which are set to come into force on August 27. 

“India has experienced a sudden deterioration in its relations with the U.S. and has been threatened with 50% tariffs, a rate that will reduce demand for Indian goods very substantially,” the report said.

It added that the tariffs imposed by the U.S. have left countries across Europe and the Asia-Pacific region “feeling bruised” since the U.S. is the largest trading partner for most of them, and a decline in sales to their largest customer “will hurt”. 

“Some firms in these countries may be willing to slash prices to maintain volumes, but this will affect firm performance through lower margins, a squeeze on wages and investment,” Moody’s Analytics added. 

“Given that we now expect tariffs to remain in place for the remainder of Trump’s presidency, the drag on growth, particularly on investments and exports, will be notable,” it said.

India has been a “bit recalcitrant” on trade negotiations with the US, Treasury Secretary Scott Bessent has said.

“That’s aspirational,” Mr. Bessent said on Fox Business on Tuesday (August 12, 2025), responding to a question on wrapping up all the tariffs and trade deals by the end of October.

“But I think we are in a good position. The big trade deals that aren’t done or aren’t agreed – Switzerland is still around, India has been a bit recalcitrant,” he said, adding that U.S. Trade Representative Jamieson Greer and teams of lawyers “are busy papering all this over”.

“So I think we will have agreed on substantial terms with all the substantial countries. And as I’ve been saying for a long time, the President’s (Donald Trump) doing peace deals, trade deals, tax deals,” he added.

Also Read | ‘Not until we get it resolved’: Trump indicates pause in trade talks over Russian oil imports

Even as trade negotiations between India and the U.S. were ongoing, Mr. Trump imposed tariffs totalling 50% on India, including 25% for Delhi’s purchases of Russian oil, which will come into effect from August 27.

Responding to the tariffs, the Ministry of External Affairs in New Delhi has said that the targeting of India is “unjustified and unreasonable”.

“Like any major economy, India will take all necessary measures to safeguard its national interests and economic security,” it said.

Last week’s announcement of Mr. Trump’s executive order imposing the additional 25% tariffs on India came at a time when a team from the U.S. is scheduled to visit India from August 25 for the sixth round of negotiations for the proposed bilateral trade agreement.

The two countries are aiming to conclude the first phase of the pact by fall (October-November) this year.