Battling Tariffs: India's Manufacturing Sector Under the US Trade Storm

This edition's cover story brings insights into how new US tariffs are reshaping the manufacturing sector. As global trade patterns shift, manufacturers are navigating fresh challenges and opportunities.

- Kaushal Dighavkar

Over the last few years, US trade policy has swung between protectionism and pragmatism, with significant repercussions for global suppliers.

In President Trump's first term (2017-2021), Washington imposed steep tariffs on steel (25%), aluminium (10%) and many Chinese imports, while President Biden largely kept these measures in place through 2024. Now, under a second Trump administration, sweeping new tariffs have been announced. From April 2025, a blanket 10% tariff will hit all imports, with additional "reciprocal" levies on countries running large trade surpluses with the US. India is among the targets, exports such as textiles and electronics face roughly 26-27% duties, alongside China (34%), Vietnam (46%) and others.

This crackdown comes as India is emerging as an alternative manufacturing hub amid the global 'China+1' shift. International companies like Apple are increasingly relocating output to India to sidestep tariffs: Reuters reports Apple plans to source most of the iPhones sold in the US from India by 2026. With India's exports surging (the textiles sector alone shipped $34.4 bn in 2023-24, about $10 bn of it to the US), the new duties represent a major shock. This story examines how these tariffs work, their impact across India's manufacturing industries, and how businesses and policymakers are responding to turn disruption into opportunity.

Understanding the Tariffs

President Trump's new trade strategy is built around a dual structure. First, a baseline 10% tariff applies to essentially all imported goods starting 5 April 2025. On top of this, from 9 April 2025, the US will impose higher "reciprocal" rates on each country with which it has a significant trade deficit.