Trump’s new tariffs spare Indian pharma and electronics

• US-bound exports made up about 23 per cent of India’s total shipments for both the June quarter of FY26 and Q1 FY25.

US President Donald Trump’s recent decision to slap 50 per cent new tariffs on imports from India sent shockwaves across trade communities—but, for now, it looks like India’s pharmaceutical and electronics shipments have dodged the bullet.

These sectors, including high-volume exports of smartphones and semiconductors, still sit comfortably on the exemption list, keeping over $30 billion in shipments shielded from immediate tariff hikes.

In the latest fiscal year (FY25), India exported $10.5 billion in pharmaceuticals and $14.6 billion in electronics—primarily smartphones—to the United States, together accounting for a significant 29 per cent of all Indian exports bound for the US.

Petroleum products, with shipments worth $4.09 billion, are also currently protected. All told, Indian exports to the US reached an impressive $86.51 billion in FY25, and much of that remains untouched for now.

Spells breathing room

The new tariffs—which Trump signaled would take effect in 21 days—have not yet swept up these key industries. For Indian exporters, that spells breathing room and perhaps even opportunity.

In fact, thanks to these exemptions, shipments to America have picked up since January, driving the share of India’s merchandise exports going to the US over 20 per cent for the first half of 2025.

Industry experts chalk up some of this growth to traders front-loading shipments before the looming tariff increases, as well as the early reprieve secured for smartphones and pharmaceuticals from the 10 per cent baseline duty that kicked in April.

Zooming out, India’s total exports showed only modest growth—less than 2 per cent in Q1 FY26, with a contraction of over 4 per cent in Q4 FY25—according to official Commerce Ministry numbers.

Exports surge

Still, the US market is carrying more weight than ever: US-bound exports made up about 23 per cent of India’s total shipments for both the June quarter of FY26 and Q1 FY25.

The outlook, however, isn’t fully sunny. Trump has floated the possibility of much steeper duties—up to 200 per cent—on foreign-made drugs, and there’s no guarantee that smartphone and electronics exemptions will stick. For now, US-bound Indian exports are in a strong position, but any policy shifts could quickly alter that landscape.

Commerce Ministry data show India shipped $25.52 billion worth of goods to America in Q1 FY26, a whopping 23 per cent increase year-on-year.

Total bilateral trade hit $32.41 billion for the quarter, and surpassed $86 billion for FY25. Indian exporters and policymakers are watching carefully, keenly aware that today’s favoured status could change just as quickly as it began.