The trade relationship between the United States and India has entered one of its most challenging phases in recent history. Former U.S. President Donald Trump, who returned to power with his “America First” agenda, has once again taken an aggressive stance on global trade. His latest move—slapping steep tariffs on multiple imported goods—has directly hit Indian industries, particularly pharmaceuticals, gems and jewellery, leather, furniture, and heavy trucks.
The announcement of 100% tariffs on branded and patented pharmaceuticals effective October 1, 2025, along with additional duties on furniture and vehicles, has sent shockwaves across India’s business and economic landscape. With India being one of the world’s largest exporters of generic medicines, diamonds, and leather goods, these new measures raise critical questions about trade fairness, global supply chains, and the future of Indo-U.S. relations.
Trump’s Tariff Offensive: What Has Changed?
In late September 2025, Trump announced a fresh series of tariffs targeting foreign imports. While the measures apply to several countries, India is among the hardest hit because of its reliance on the U.S. market.
The new tariffs include:
- 100% tariff on branded and patented pharmaceuticals, unless the manufacturer is actively building a plant in the U.S.
- 50% tariff on kitchen cabinets and bathroom vanities.
- 30% tariff on upholstered furniture.
- 25% tariff on heavy trucks.
These measures come on top of earlier actions in 2025 when Trump had already imposed 25% reciprocal tariffs on Indian goods. A further 25% penalty was added due to India’s continued oil trade with Russia, effectively pushing total duties on many products to 50%.
Why India Is in the Spotlight
The U.S. has long been one of India’s top export markets. Indian pharmaceuticals, IT services, textiles, leather, and jewellery enjoy significant demand in America. Trump’s tariff strategy seems aimed at forcing foreign companies to either manufacture in the U.S. or lose competitiveness due to higher costs.
For India, the pharmaceutical sector is particularly vulnerable. While the U.S. remains the largest buyer of Indian generic medicines, there is confusion over whether the 100% tariff applies only to branded drugs or also to generics. If generics are included, Indian pharma exports could face a severe blow, leading to reduced margins and price pressures.
Additionally, the gems and jewellery industry, already battling global demand fluctuations, has sounded alarm bells. Industry bodies like the Gem & Jewellery Export Promotion Council (GJEPC) have requested urgent government relief after a sharp drop in orders due to tariffs.
Market Reaction in India
The immediate impact of Trump’s announcement was visible in Indian financial markets.
- Pharma stocks tumbled, with leading companies facing investor sell-offs.
- The rupee came under pressure, with analysts warning that the fresh wave of tariffs could push the currency to historic lows.
- Export-oriented sectors such as gems, textiles, and leather began lobbying the Indian government for support to offset the U.S. tariff shock.
The uncertainty surrounding tariff exemptions—particularly the clause that exempts companies building U.S. plants—has added to investor anxiety. Many Indian pharma giants may consider shifting part of their production to the U.S. to remain competitive, but such moves involve high costs and long lead times.
Diplomatic and Strategic Fallout
India has strongly condemned the U.S. tariffs, calling them “unfair, unjustified, and unreasonable.” The Indian government has emphasized that these measures violate the spirit of free trade and could harm the long-standing economic partnership between the two nations.
On the American side, officials defend the tariffs as part of a larger strategy to reduce trade deficits and curb dependence on foreign manufacturing. Trump has repeatedly stressed that companies must “build in America” if they want to access the U.S. market without penalty.
Another dimension to this dispute is India’s continued oil imports from Russia. The U.S. has linked higher tariffs to New Delhi’s refusal to cut ties with Moscow, thereby turning trade policy into a geopolitical tool.
Sector-Wise Impact
- Pharmaceuticals – Uncertainty over generic drugs could disrupt India’s largest export sector. Companies may be forced to diversify to other markets like Europe and Africa.
- Gems & Jewellery – Already facing falling demand, the 50% tariff threatens jobs and foreign exchange earnings in this labor-intensive sector.
- Leather & Textiles – Tariffs make Indian products costlier compared to competitors from Vietnam, Bangladesh, and Mexico.
- Furniture & Trucks – While not core to Indian exports, these tariffs still affect niche manufacturers and supply chains.
What Lies Ahead?
The coming weeks will be crucial as India explores its response. Possible strategies include:
- Retaliatory tariffs on American imports to India.
- Diplomatic negotiations to secure exemptions for key sectors like generics.
- Diversification of export markets, reducing dependence on the U.S.
- Strengthening domestic policies to cushion exporters from tariff shocks.
For now, the trade relationship between the two democracies is under serious strain. While Trump’s policies are popular among his domestic voter base, they risk disrupting global supply chains and alienating strategic partners like India.
Conclusion
The Trump tariffs mark a significant escalation in U.S.–India trade tensions. With duties as high as 100%, Indian exporters face uncertain times. The pharmaceutical, jewellery, and leather sectors are already feeling the heat, while the rupee’s weakness adds to the pressure.
India will have to walk a fine line—protecting its economic interests while avoiding a full-blown trade war with Washington. The ultimate outcome will depend on whether diplomacy can ease tensions or whether both sides dig deeper into a protectionist stance.
For businesses and investors, one thing is clear: the new era of Trump tariffs has only just begun, and India must brace itself for a bumpy road ahead.