Seizing Opportunities in the Evolving US Tariff Landscape: Implications for India

In response to economic pressures and a drive to bolster domestic industry, the United States recently announced reciprocal tariffs on over 20 nations, with implementation deadlines set for August 1, 2025. Uniquely, India has been exempted from these new measures creating a critical opportunity for Indian manufacturers, exporters, and foreign investors seeking tariff-friendly access to the lucrative US market.

The bilateral trade agreement (BTA) between India and the US is progressing, with the fifth round of negotiations concluded in Washington on July 17, and further talks scheduled for August 2025. While agricultural and dairy issues remain central topics, the broader dialogue underlines emerging avenues for enhanced trade relations and mutual market access.

India’s trade with the US currently encompasses $8 bln in agricultural goods, with prominent exports including rice, shrimp, and spices. As negotiations advance, the US is targeting expanded exports of maize, soybean, cotton, and corn to India.

EAC’s deep-dive analysis identifies robust upward export potential for India, especially in sectors where it currently holds less than 5% share in US imports. Sectors primed for growth include Mechanical Equipment & Industrial Machinery, Automotive Components, Electrical Equipment, Textiles and Apparels, Chemicals and Miscellaneous Goods

As global firms assess the evolving comparative advantage across manufacturing destinations, India’s exemption from US tariffs positions it as a highly attractive alternative to traditional supply chain hubs in China and Southeast Asia.

Key strategic actions recommended include:

• Assessing feasibility and profitability of exporting to the US at expected quality levels.
• Engaging in contract manufacturing to serve as an alternative source for global players seeking to avoid tariff penalties.
• Conducting risk assessments for manufacturing operations in high-tariff countries versus India.
• Redefining global supply chain strategies in light of new geopolitical and economic realities.

The current tariff environment, alongside advancing bilateral negotiations, offers a unique window for Indian businesses and foreign investors to strengthen their US export presence and recalibrate their global operations. EAC remains committed to supporting clients with actionable insights and strategies tailored to this shifting trade landscape.