Over $8 billion of India’s exports may still face higher tariffs even after India-US trade deal

NEW DELHI : Nearly a tenth of India’s exports to the United States, worth about $8.3 billion, will still face higher tariffs of 25 percent or more, despite the India-US trade deal coming into force, according to a Moneycontrol analysis. While the trade deal will bring down reciprocal tariffs to 18 percent, duties levied under Section 232 of the Trade Expansion Act of 1962 would remain untouched as they have for other trade agreements.

US President Donald Trump had raised duties to 50 percent on steel, aluminium and copper products, 25 percent on furniture and 25 percent on automobiles and auto parts.

These tariffs are justified on national security grounds and are based on investigations and recommendations rather than presidential emergency powers.

Donald Trump on February 2 announced a first tranche of trade deal with India, bringing down reciprocal tariff to 18 percent from 25 percent. “It was an Honor to speak with Prime Minister Modi, of India, this morning.

He is one of my greatest friends and, a Powerful and Respected Leader of his Country.. Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25% to 18%.

They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO,” President Trump had tweeted on his social media platform Truth Social.

Section 232 measures cover a range of strategically sensitive products, including steel, aluminium, automobiles, timber, copper and certain categories of machinery and still apply to countries that have signed trade agreements with the US.

According to UN COMTRADE data, India exported about $8.3 billion worth of such goods to the US in 2024. This accounted for 10.4 percent of India’s total exports to the American market, which stood at roughly $80 billion that year. In effect, even a favourable court ruling would still leave around one in every ten export dollars exposed to US tariffs.

This exposure is unevenly distributed across sectors. India’s dependence on the US market is significantly higher in tariff-sensitive categories than in its overall export basket. While the US absorbed about 18.3 percent of India’s total exports in 2024, its share rose to 22.7 percent for products covered under Section 232, underscoring how heavily Indian producers in these industries rely on American demand.

Automobiles form the single largest block of exposure, with shipments worth $3.9 billion falling under the national security lens. Steel exports totalled around $2.5 billion, while aluminium shipments were close to $800 million. Together, these three categories account for more than 85 percent of India’s exports that remain at risk under Section 232 duties. Timber, copper and industrial vehicles add smaller but still meaningful amounts to the tally.

In proportional terms, the concentration is even starker. The US accounted for nearly 39 percent of India’s global timber exports in 2024, about 37 percent of aluminium exports, and roughly 34 percent of steel exports. Such heavy reliance means that even modest tariff barriers can have outsized effects on Indian producers’ margins, competitiveness and investment decisions.