US President Donald Trump’s decision to impose 26% tariff on Indian exports and imports, which is currently paused, impact Indian businesses by reducing competitiveness in the USA market. Export-driven sectors such as textiles, pharmaceuticals and automotive parts would face a drop in demand, thereby affecting revenue and jobs. On the import side, Indian companies relying on USA machinery or raw materials would see increased expenditure. The move could, especially hurt small businesses.
Ritika Arora Bhola
Indian EXIM traders are exploring options to stay competitive after USA President Donald Trump’s presidential order to impose a 26 per cent tariff on Indian exports and imports, which is currently paused for 90 days.
Indian firms are exploring new trade markets—Vietnam and Singapore—to reduce dependence on USA, heavily investing in smart warehousing and SEZs near airports and ports, urging governments to implement FTAs, encouraging domestic manufacturing to formulating efficient strategies to make supply chain strong and steady, and stay resilient during disruptions.
Currently, at 10 per cent, the increased rate would have a significant impact on Indian businesses across multiple sectors. Such high tariffs would make Indian goods expensive and less competitive in the USA market, which is one of India’s largest trading partners. This is the major concern of the traders now.
Export-oriented firms such as textiles, pharma, automotive parts and IT hardware would face reduced demand, leading to potential revenue losses, job cuts and scaling down of operations. SMEs, which form the backbone of India’s export economy, would be vulnerable due to their limited ability to absorb cost shocks or shift markets quickly.
On the import side, businesses relying on American machinery, technology, or agricultural products would face higher input costs, thereby squeezing profit margins and potentially increasing prices for Indian consumers.
Overall, the decision could veritably strain USA-India trade ties, disrupt supply chains and push Indian businesses to diversify markets, invest in domestic production, or seek government support to stay afloat.
In the near term, exporters are likely to explore cost-optimisation strategies rather than altering their logistics modes, as per experts. Exporters are currently in the process of evaluating the cost implications of the tariffs and assessing whether shifting logistics modes would be economically viable. For now, exporters are focusing on cost-efficiency measures and awaiting potential relief through ongoing bilateral trade negotiations. CARGOTALK discusses with experts the impact and consequences.
Compliance overheads could go up by 10%
Sateshwar Tuteja, Director Sales, Jeena & Co.
Over 40 per cent of Indian apparel exporters have shifted their operations to Vietnam and Bangladesh, and major shipping lines are preparing for a 25 per cent reduction in capacity on US-bound routes. Industries relying on imports are witnessing 12 to 15 per cent cost increase, offsetting the potential gains from reshoring. The tariff on Indian exports would impact telecom, gems and jewellery, auto parts, and processed foods, accounting for US$ 21 billion in annual trade. We foresee tighter customs checks, increased dwell times, and compliance overheads that drive costs up by 10 per cent.”
Exporters consider shift to sea freight
Amit Maheshwari, CEO and Founder, Softlink Global
Exports of electronics and smartphones to the USA, which stood at US$ 14.4 billion in 2024, are likely to dip due of the 26 per cent tariff. This decline is likely to impact air cargo volumes, as exporters may reduce shipments or seek alternative markets. While the tariffs themselves do not increase freight costs, they elevate the overall landed cost of products. The anticipation of tariffs has led exporters to expedite shipments to the USA before they come into effect. Given the increased costs associated with the tariffs, some exporters are considering a shift to sea freight.”
India-US freight rates risen by 18% YoY
Parwinder Singh, MD, Hans Infomatic
Exporters might be exploring new global markets to reduce overdependence on the USA and improving coordination with suppliers and inventory systems. There’s increased investment in smarter warehousing near ports and better freight planning to manage costs and avoid delays. Industry bodies and govt are pushing for FTAs, while exporters look to benefit from FTAs and SEZs. India-US freight rates have risen by 18 per cent year-on-year. The US tariffs, aimed at correcting trade imbalances, have had far-reaching consequences.”
US tariffs to make exporters less competitive
Abhishek Goyal, CEO & Executive Director Aeroprime Group
The USA has recently shifted its trade policy, increasingly using tariffs to manage global trade imbalances. While earlier tariffs were directed at China, now Indian products are also affected, thanks to the reciprocal tariff of 26 per cent. We anticipate this will lead to increased overall costs in the USA and will make it harder for the Indian exporters to stay competitive. We are seeing a shift in strategy for some product categories towards sea freight. While we have not witnessed a drop in air cargo volumes, the logistics strategy is evolving with announcements coming daily.”
Silver lining emerges in Asian context
Mohit Kapoor, Chair Projects and Events Committee, WAI
Higher tariffs disrupt predictability for 3PL players and forwarders. As clients recalibrate their US-focused strategies, Indian logistics operators face uncertainty in volumes and scheduling. SMEs, dependent on USA trade corridors, bear the brunt of warehousing rent pressures, longer storage periods, and altered fulfillment cycles. Despite these challenges, a notable silver lining emerges when viewed in a broader Asian context. Vietnam, Indonesia, and even China have been subjected to steeper and sweeping US tariffs. Double rates imposed on India.”
Vital implications for air cargo trade
Vipin Vohra, Chairman, Continental Carriers
The US tariffs—26 per cent on Indian imports and 10 per cent baseline on all global goods—pose vital implications for India’s air cargo trade. High-value sectors such as textiles & apparel, gems & jewellery and pharma will see reduced competitiveness, impacting air export volumes. A decline in exports may lead to a notable contraction in annual air cargo trade volumes and value. On import side, US duties may hit goods routed through re-export hubs, reducing inbound air freight demand. India’s growing consumption and diversification into ME, Europe, and Africa offer partial offsets.”
Textiles might increase due to Bangaldesh
Nihar Parida, Director, Strategy & Development Uniworld Logistics
The US tariffs on Indian goods have led to a decline in air cargo volumes from India to the USA as costs rise, and buyers adjust sourcing strategies. Pharma: Many generics and APIs faced compliance and loss of GSP benefits earlier are now under a broader 10 to 26 per cent tariff. Gems & jewellery: Now subject to full tariffs plus possible extra duties (up to 26%). Textiles & apparel: With the GSP revoked and new tariffs added, garments face 15 to 25 per cent tariffs. India could gain in this as mobile phone exports increase. Rates on textile might increase due to Bangladesh tariffs.”
We must act to develop manufacturing base
V. Chandra Kumar, Founder & MD, Active Freight Logistics, India
With global manufacturers looking for tariff-friendly alternatives, India is well-positioned to capitalise on this shift. India’s industrial base, improving trade infrastructure and government incentives make it an attractive destination for firms seeking to diversify away from China and Vietnam. Experts suggest India must act swiftly to enhance manufacturing capabilities to cement its position as a leading trade and logistics hub in the evolving world order. As businesses realign strategies, the coming months will be critical for countries vying for a larger share of global trade.”
Some may shift focus to non-USA markets
C K Govil, President, ACAAI
The impact of US trade tariffs on Indian air cargo EXIM trade is multifaceted, throwing up opportunities and challenges. Negative impact could mean higher costs for Indian exporters as more tariffs on Indian goods. Tariff uncertainty causes fluctuations in demand, impacting freight forwarders, air cargo handlers, and exporters. Volatility in policies forces biz to adjust logistics strategies. Some exporters may shift focus to non-USA markets, affecting air cargo routes and reducing volume on USA-bound shipments. Positive impact could be chances in trade diversion.”
India must improve infra & EoDB
Sunil Kohli, Managing Director, Rahat Cargo
The imposition of trade tariffs may hit exports from several sectors, apart from sizeable volumes of seafood. Experts still anticipate silver lining in the tariffs about India’s cargo trade interest as the US tariffs might open opportunities through shifts in global supply chains. But India needs to improve EoDB apart from investing in logistics infra to achieve productivity and business advantages. The FIEO agrees the tariffs do create challenges for Indian exporters’, yet India is better placed than its competitors. Indian firms in USA might absorb costs and end up passing them on to consumers.”
Situation calls for diplomatic dialogue
Satish Lakkaraju, CEO, NexGen Logistics, Garudavega
While the US govt’s decision on tariffs may be politically motivated, its risks have long-term consequences, not just on India, but on global health systems—access to medicines, and the pharma supply chain. The situation calls for diplomatic dialogue and efforts to protect public health, while addressing trade concerns. My view is that they may impose tariff on other commodities but not on pharma specifically and humanitarian view needs to be adopted.Whether India can seize this opportunity will depend on policy reforms, infra development, and ability to integrate into global supply chains efficiently.”
US consumers will pay more for pharma
Afzal Malbarwala, Managing Director, Galaxy Freight
The tariffs will impact India since USA is its biggest export amarket. And the US consumers will face either a price hike on low-cost generic drugs or the insurers will need to absorb the added cost. The discussion should be on alleged ‘threat to security’ that has forced the USA to impose tariffs. They must not forget it is healthcare we are talking about. Every nation is vital in a bilateral trade relationship. This must be considered in the upcoming trade talks with USA. Either the production cost will increase, and price competitiveness will dwindle, or Indian exporters will have to look for alternatives.”
Tariffs to hike costs, disrupt supply chains
Cyrus Katgara, Partner, Jeena & Company
Tariffs can increase the cost of pharma for consumers, healthcare providers, and governments thereby potentially making essential medicines less accessible. Tariffs can disrupt global supply chains, leading to delays, more costs, and potential shortages of critical medicines. Tariffs can affect India’s pharma industry, a significant contributor to Indian economy. Tariffs can create uncertainty among patients, healthcare providers, and stakeholders. Tariffs can also raise concerns about access to essential drugs to elderly, children, and those with chronic conditions.”
Protability of exporters, mainly SMEs, impacted
Vandana Singh, Chairperson Aviation & Cargo, FAII
The elevated tariffs have made Indian goods less competitive in the USA, resulting in a decline in volumes on the India–USA route for these product categories. Exporters are reassessing shipment volumes and destinations in response to shifting trade dynamics. Freight costs have increased. While tariffs raise the cost of goods, their impact is compounded by global logistics disruptions. On the other hand, exporters face a dual burden—higher costs due to US tariffs and increased freight charges—making it harder to maintain profitability, especially for SMEs.”
