The United States has officially notified an additional 25% tariff on Indian products, raising the total tariff to 50% for many goods, effective August 27, 2025. This move, which comes a day before the tariffs are set to take effect, is based on Executive Order 14329, signed by U.S. President Donald Trump, citing India’s trade in Russian crude oil. While the tariffs are broad, there are some important exceptions and grace periods that will provide temporary relief for certain products and shipments.
The Rules for the 50% Tariffs
According to a notice from the U.S. Department of Homeland Security, the new duties will apply to Indian products that are “entered for consumption, or withdrawn from a warehouse for consumption, on or after 12:01 am EST on 27 August 2025.”
However, there are two key exceptions:
- In-transit goods: Products that were already loaded onto a vessel at their port of origin and were in transit on their final mode of transportation to the U.S. before 12:01 am EST on August 27, 2025, will not be subject to the new tariffs.
- Grace period: These in-transit goods will be exempt from the new duties, provided they are entered for consumption or withdrawn from a warehouse for consumption before 12:01 am EST on September 17, 2025.
Importers must certify that their products qualify for this in-transit exception by declaring a new harmonized tariff schedule.
Key Exempted Goods and Sectors
While a wide range of goods will be hit by the tariffs, including textiles, gems and jewelry, leather, and seafood, several key sectors have been granted exemptions. These include:
- Pharma and Electronics: India’s pharmaceutical sector, a critical supplier of generic drugs to the U.S., is exempt. Electronics, including chips, mobile phones, and tablets, are also not affected by the new tariffs. This provides a significant reprieve for companies like Apple, which has ramped up iPhone production in India.
- Heavy Industry: Goods made of iron and steel, aluminum, and copper are also exempt.
- Automotive: Passenger vehicles, light trucks, and other auto components are not subject to the increased duties.
These exemptions are seen as a temporary relief, as the U.S. Commerce Department is currently conducting a review under Section 232 of the Trade Expansion Act, which could lead to future tariffs on these exempted goods, particularly in the semiconductor sector.
India’s Response and Broader Implications
The new tariffs are a significant blow to Indian exporters and are expected to affect over half of India’s merchandise exports to the U.S. The U.S. has justified the tariffs by citing India’s continued purchase of Russian crude oil, which it claims is “fuelling the war machine” in Ukraine.
Despite the economic pressure, Indian refiners, led by Indian Oil Corporation and Reliance Industries, have indicated they will curb but not entirely pause their purchases of Russian oil. This suggests that New Delhi has no plans to completely sever its trade ties with Moscow.