Will US withdraw additional 25% tariffs from Indian products? What will be its impact?

As the United States is resetting its policies with various countries worldwide, its ties with India may see a drastic shift as US treasury secretary Scott Bessent hinted towards a possibility of a “path” to removing 25 per cent additional tariffs imposed on India over its purchases of Russian oil. Bessent reasoned that the tax penalties on India have achieved their targets as they successfully lowered Indian imports.  

While speaking to Politico at the World Economic Forum in Davos, Bessent said, “We put 25% tariffs on India for buying Russian oil and the Indian purchases by their refineries of Russian oil have collapsed. So that is a success. The tariffs are still on. The 25% Russian oil tariffs are still on. I would imagine that there is a path to take them off,” he said, calling it “a check and a huge success”. 

Last year in August, US President Donald Trump imposed a 25 percent tariff against India “plus penalty”, citing its business with Russia. Later, he declared an additional 25 percent tariff, again accusing New Delhi of fueling the Ukraine war by continuing to purchase Russian oil.  If Washington decides to remove the additional 25% tariff on India, only 25% tariff will be then remained.  

How will 25% tariff removal boost India’s global trade? 

The step would enhance India’s chances to effectively compete in the international market and in price-sensitive markets in particular. Here’s how  

It would lower landing costs for Indian exports which would be able to compete with goods from Vietnam, Mexico, and China while making them more attractive to US buyers.  

The industries that would benefit the most are: Textiles, Pharmaceuticals & chemicals, Engineering goods, auto components, Gems & jewellery, electronics, leather goods 

It would boost India’s image as a strong alternative manufacturing base 

India will potentially become more lucrative for US investors and multinationals 

India’s trade balance would improve 

How the additional tariffs impacted India’s exports to US? 

After imposition of the additional import tariff, India’s exports to the United States declined massively. According to a report by the Global Trade Research Initiative (GTRI), exports came down to 28.5%, from $8.83 billion in May 2025 to $6.31 billion in October 2025. Various industries suffered heavy losses as: 

-In the gems market, Indian diamonds and jewellery became far more expensive,  

-Leather exports witnessed less shipments and revenue declines 

-Fisheries: Seafood exports to the US became expensive and less competitive 

-In Textiles industry, fabric trade saw sharp competitiveness losses 

Will India’s trade with US improve? 

These areas will see some improvement: 

-Boost competitiveness: The above products would become cheaper, including iron, leather, seafood and more allowing Indian exporters to regain losses.  

-Rise in demand for Indian goods: US buyers who relied on goods from Vietnam, Bangladesh or Latin America may resume trade with India. 

-Margins improve: Exporters, especially MSMEs, would get relief from reduced profits, enabling capacity utilisation and rehiring. 

-Exports will increase: Exports will boost in the above sectors, while highly tariff-sensitive areas will see quickest rebound.