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Assessing he Impac o 2025 Recip ocal Ta i s on India–US Expo T ade
D . Mangesh D. Jadha
Assis an P o esso , Dep . o Comme ce
Shi aji A s, Comme ce & Science College Kannad.
Manusc ip ID:
JRD -2025(I)-170925
ISSN: 2230-9578
Volume 17
Issue 9(I)|
Pp. 107-110
Sep . 2025
Submi ed: 9 Aug. 2025
Re ised: 20 Aug. 2025
Accep ed: 20 Sep . 2025
Published: 30 Sep . 2025
Abs ac . –
The 2025 imposi ion o ecip ocal a i s by he Uni ed S a es ma ks a signi ican shi in
global ade dynamics, di ec ly impac ing India's expo ela ionship wi h i s key ading pa ne . Unde
Execu i e O de 14257, India now aces a 26% ecip ocal a i a e on a b oad ange o goods expo ed
o he U.S., a ec ing o e $80 billion in annual ade. This s udy e alua es he sec o -wise impac o hese
a i s, ocusing on high- alue and p ice-sensi i e ca ego ies such as enginee ing goods, elec onics,
ex iles, and gems & jewel y, which collec i ely ep esen mo e han 60% o India’s U.S.-bound expo s.
The pape examines India's s a egic esponse, including a i nego ia ions, ma ke di e si ica ion, and
domes ic policy ecalib a ion. O e all, his analysis p o ides a imely assessmen o how ecip ocal ade
policy could eshape he s uc u e, compe i i eness, and sus ainabili y o India’s expo economy.
Keywo ds- Recip ocal, Ta i s, Expo , ai T ade p ac ices and Impo .
In oduc ion
Recip ocal a i s occu when one coun y imposes a ax on impo s om ano he coun y
in esponse o ha coun y doing he same. Fo ins ance, i Coun y A places a 15% a i on
s eel om Coun y B, hen Coun y B migh e alia e by imposing a simila ax on ca s om
Coun y A. The unde lying idea is o p omo e ai ness ei he by p o ec ing domes ic indus ies
o by p essu ing he o he coun y o lowe i s ade ba ie s. These a i s a e o en used as a
nego ia ing ool. Howe e , i bo h coun ies con inue o escala e he si ua ion by imposing mo e
a i s, i can lead o a ade wa , as seen in he ecen con lic be ween he U.S. and China. On
he o he hand, i bo h pa ies a e willing o comp omise, such dispu es can lead o dialogue and
e en ual a i educ ions.
2. Objec i es o he s udy:
1. To know he concep o Recip ocal Ta i s.
2. To E alua e Sec o Speci ic impac s o ecip ocal Ta i s.
3. To Analyze he Change in Expo Volume and Value.
3. Resea ch me hodology:
The s udy based on seconda y in o ma ion/da a. Di e en jou nals, newspape s, ele an
websi es ha e been consul ed in o de o make he s udy an e ec i e one. The p esen s udy is
an a emp o examine he Impac s o Recip ocal Ta i s 2025 on India.
4. Concep o Recip ocal Ta i s
A ecip ocal a i e e s o a ade policy in which wo coun ies ag ee o g an each o he
he same o simila a i a es on impo s and expo s.
Quick Response Code:
Websi e:
h ps://j d b.o g/
DOI:
10.5281/zenodo.16885235
C ea i e Commons (CC BY-NC-SA 4.0)
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A ibu ion-NonComme cial-Sha eAlike 4.0 In e na ional Public License, which allows o he s o emix,
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Add ess o co espondence:
D . Mangesh D. Jadha , Assis an P o esso , Dep . o Comme ce,Shi aji A s, Comme ce &
Science College Kannad
How o ci e his a icle:
M.D. Jadha .(2025). Assessing he Impac o 2025 Recip ocal Ta i s on India–US Expo
T ade. Jou nal o Resea ch & De elopmen , 17(9(I)),107-110
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In simple e ms, i 's a mu ual a angemen whe e each coun y educes a i s ( axes on impo s) o he o he ,
aiming o p omo e ai and balanced ade.
5. Impac o U.S. Recip ocal Ta i s on India
India’s elec onics expo s include sma phones, mobile componen s, consume elec onics like TVs and
appliances, and semiconduc o s. The imposi ion o a 26% e ec i e U.S. a i is likely o inc ease landed cos s,
po en ially educing he compe i i eness o Indian elec onics in he U.S. ma ke . While go e nmen ini ia i es like he
P oduc ion Linked Incen i e (PLI) schemes ha e been ueling g ow h in his sec o , hese a i s could slow ha
p og ess. In he sho e m, a decline in expo olumes pa icula ly o consume p oduc s such as sma phones and
PCs is possible. O e he long e m, Indian companies may espond by di e si ying in o al e na i e ma ke s o
eloca ing mo e manu ac u ing ope a ions o he U.S. o mi iga e a i impac s. India’s expo s in his sec o p ima ily
include wo-wheele s, elec ic ehicle (EV) componen s, and a ious au o pa s. Gi en he U.S.’s obus domes ic
au omo i e indus y, he imposi ion o addi ional a i s u he widens he cos disad an age o Indian expo e s. EV
pa s and au o componen s may see diminished demand as U.S. buye s po en ially u n o lowe -cos supplie s like
Mexico, which bene i s om a o able ade ag eemen s. Due o he p ice-sensi i e na u e o many Indian au omo i e
expo s, he 26% a i poses a signi ican ba ie , likely discou aging U.S. buye s and impac ing o e all expo
olumes.
Table No. 1
Impac o U.S. Recip ocal Ta i s on India (Speci ically 52% base, 26% discoun ed)
Sec o
Sha e (%)
App ox. Value (USD Billion)
Enginee ing Goods
24%
$18.88 billion
Gems and Jewelle y
14%
$11.01 billion
Elec onics
11%
$8.65 billion
Pha maceu icals
10%
$7.87 billion
Tex iles and Appa el
9%
$7.08 billion
Au omobiles & Au o Pa s
7%
$5.51 billion
Chemicals (excl. Pha ma)
6%
$4.72 billion
O he s (Ag i, Lea he , e c.)
19%
$14.94 billion
Table No. 1 p esen s he sec o -wise impac o U.S. ecip ocal a i s on Indian expo s, speci ically unde a a i
egime wi h a 52% base a e and a 26% discoun ed a e. The da a indica es ha enginee ing goods o m he la ges
sha e o Indian expo s o he U.S., accoun ing o 24% o he o al, wi h an app oxima e alue o $18.88 billion. This
makes he sec o pa icula ly ulne able o any a i inc eases, as a signi ican po ion o ade could be a ec ed. Gems
and jewelle y ollow, ep esen ing 14% o he expo sha e, alued a a ound $11.01 billion. Gi en he high alue and
disc e iona y na u e o hese i ems, his sec o may ace challenges in sus aining demand unde highe a i condi ions.
Elec onics, which accoun o 11% o $8.65 billion, a e also a high isk due o hei p ice-sensi i e na u e and global
compe i ion. Pha maceu icals, wi h a 10% sha e ($7.87 billion), may be less impac ed owing o hei essen ial na u e
and s able demand. Tex iles and appa el (9%, $7.08 billion) also cons i u e a no able po ion o expo s and could ace
mode a e p essu e, depending on he a ailabili y o al e na i e supplie s and cos dynamics. Au omobiles and au o
pa s, al hough making up a smalle sha e a 7% ($5.51 billion), a e highly suscep ible o a i inc eases due o he high
p ice elas ici y and s ong U.S. domes ic compe i ion in his sec o . Chemicals (excluding pha maceu icals) comp ise
6% o expo s, alued a $4.72 billion, and may ace mode a e e ec s depending on he speci ic p oduc ca ego ies.
Finally, he “O he s” ca ego y, which includes ag icul u al p oduc s, lea he , and miscellaneous goods, makes up a
subs an ial 19% o he o al expo s, amoun ing o $14.94 billion. While his ca ego y is di e se, many o i s
componen s may be highly sensi i e o a i changes due o hei commodi ized na u e and compe i ion om o he
expo ing na ions. In summa y, sec o s like enginee ing goods, gems and jewelle y, and elec onics—owing o hei
high expo alue and p ice sensi i i y—s and o be mos a ec ed by ecip ocal U.S. a i s, while pha maceu icals may
emain compa a i ely s able. The o e all ade impac will depend on each sec o 's abili y o abso b p ice inc eases,
ind al e na i e ma ke s, o nego ia e a i elie .
6. S a egic Obse a ions
Al hough India bene i s om a educed ecip ocal a i a e o 26% down om a high base o 52% i s goods s ill
ace a compe i i e disad an age compa ed o U.S. F ee T ade Ag eemen (FTA) pa ne s like Mexico, Canada, and
Sou h Ko ea. The U.S. emphasis on ecip oci y highligh s ongoing conce ns o e India’s a i ba ie s, which a e o en
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pe cei ed as high, pa icula ly in ag icul u e, echnology, and au omo i e sec o s. India’s pa h o wa d lies in
capi alizing on i s cos ad an ages and enhancing supply chain e iciencies, engaging in bila e al nego ia ions o secu e
sec o -speci ic concessions o mu ual unde s anding, and con inuing o a ac U.S. i ms o co-p oduc ion o join
en u es o deepen economic ies and o se a i challenges.
Table No.2
Impac o U.S. Recip ocal Ta i s on India
Sec o
Ta i Impac
Risk Le el
No es
Elec onics
High
High
P ice-sensi i e expo s; may lose
compe i i eness.
Au o & Au o Pa s
High
High
Faces s i U.S. domes ic compe i ion;
a i s aise p ices
Pha maceu icals
Low
Low
Less impac ed due o demand and essen ial
na u e.
Tex iles/Appa el
Medium
Medium
Al e na i es exis , bu s ill compe i i e.
Enginee ing Goods
Medium
Medium
B2B p oduc s; cos ma e s, bu less elas ic
han consume goods.
Abo e able no.2 shows he imposi ion o ecip ocal a i s by he Uni ed S a es on Indian goods is expec ed o
ha e a a ied impac ac oss di e en sec o s, wi h elec onics and au o & au o pa s indus ies acing he mos
signi ican challenges. The elec onics sec o is ma ked by high a i impac and isk le el, p ima ily due o i s p ice-
sensi i e na u e. This makes Indian expo s in his ca ego y ulne able, as hey may lose hei compe i i eness in he
U.S. ma ke when p ices ise due o a i s. Simila ly, he au o and au o pa s sec o also alls in o he high-impac ,
high- isk ca ego y. This sec o al eady aces in ense compe i ion om es ablished U.S. manu ac u e s, and he addi ion
o a i s u he aises he cos o Indian expo s, educing hei ma ke appeal. In con as , he pha maceu ical sec o
appea s o be ela i ely insula ed om he e ec s o hese a i s. Wi h a low a i impac and isk le el, his sec o
bene i s om he essen ial and non-subs i u able na u e o many o i s p oduc s, which is con inue o see consis en
demand ega dless o p ice changes. The ex iles and appa el sec o aces a medium le el o a i impac and isk.
While al e na i es o Indian p oduc s exis , he sec o e ains some compe i i eness, especially in niche and alue-
added segmen s. Las ly, enginee ing goods, which a e ypically business- o-business (B2B) p oduc s, also expe ience a
medium impac and isk le el. Al hough p ice sensi i i y exis s, i is less elas ic compa ed o consume goods, meaning
he demand may no d op d as ically wi h mode a e p ice inc eases. O e all, he a i s a e likely o p essu e India’s
p ice-sensi i e expo sec o s, while essen ial goods like pha maceu icals may emain la gely una ec ed.
Table No.3
Pe cen ages a e app oxima e, calcula ed by aligning Minis y o Comme ce da a wi h India's o al expo s o he
U.S.
Sec o
Value (in
billions)
Pe cen age o
U.S. Expo s
Goods
Enginee ing Goods
$17.63
22%
Machine y, equipmen , and me al p oduc s
Elec onics
$10.05
13%
Sma phone, elecom equipmen , and o he
elec onic goods
Gems and Jewel y
$9.00
11%
Pea ls, p ecious s ones, and gold jewel y
Pha maceu icals
$8.00
10%
Gene ic d ugs and o mula ions
Tex iles and Appa el
$9.00
12%
Ready-made ga men s and ab ics
Au omobiles and Au o
Pa s
$2.60
3%
Ready-made ga men s and ab ics
O he Sec o s (Pe oleum,
Chemicals, Ce eals, e c.)
$21.77
29%
Au o componen s and some
Table No. 3 ou lines he composi ion o India’s expo s o he Uni ed S a es, highligh ing he ela i e signi icance
o di e en sec o s as a pe cen age o o al U.S.-bound expo s. The da a, aligned wi h igu es om he Minis y o
Comme ce, e eals ha enginee ing goods ep esen he la ges single ca ego y, accoun ing o app oxima ely 22% o
India’s o al expo s o he U.S., alued a $17.63 billion. This includes machine y, equipmen , and me al p oduc s,
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e lec ing he s eng h o India's indus ial manu ac u ing base. Elec onics ollow wi h a 13% sha e, amoun ing o
$10.05 billion. These expo s include sma phones, elecom equipmen , and a ious elec onic componen s i ems ha
a e highly in eg a ed in o global supply chains bu also sensi i e o p ice luc ua ions and a i s. Gems and jewel y, a
adi ional expo s onghold, con ibu e 11% ($9.00 billion), encompassing pea ls, p ecious s ones, and gold jewel y.
These luxu y i ems a e ulne able o shi s in consume demand and a i imposi ions due o hei disc e iona y na u e.
Pha maceu icals, making up 10% o expo s ($8.00 billion), consis la gely o gene ic d ugs and o mula ions. This
sec o emains ela i ely esilien due o he essen ial and o en non-subs i u able na u e o i s p oduc s. Tex iles and
appa el also play a signi ican ole, con ibu ing 12% o $9.00 billion, la gely d i en by eady-made ga men s and
ab ics. Despi e being exposed o compe i i e p essu es, Indian ex iles e ain a signi ican p esence due o hei cos -
e ec i eness and scale.
Au omobiles and au o pa s accoun o a compa a i ely small sha e a 3%, o aling $2.60 billion. This lowe
igu e e lec s bo h a i sensi i i y and s i compe i ion om U.S. and o he global manu ac u e s. Finally, he "O he
Sec o s" ca ego y, which includes pe oleum p oduc s, chemicals, ce eals, and mo e, o ms he la ges combined sha e
a 29% o $21.77 billion. This di e se segmen unde sco es India’s b oad-based expo oo p in o he U.S., al hough
many o hese goods a e commodi y-based and sensi i e o p ice shi s. O e all, he able unde sco es ha while
enginee ing goods, elec onics, and ex iles a e co e o India’s expo baske o he U.S., he di e si y ac oss sec o s
means any changes in ade policy such as ecip ocal a i s will ha e a ied impac s depending on he na u e o he
goods, hei demand elas ici y, and global compe i ion.
Challenges o India
India aces se e al challenges in scaling i s manu ac u ing and expo po en ial. I s in as uc u e co e ing
logis ics, anspo a ion, and indus ial zones emains unde de eloped compa ed o China and he EU, limi ing apid
expansion. Addi ionally, he a i di e en ial, wi h he EU a 20% e sus India’s 26%, may lead some U.S. impo e s,
especially hose handling high- alue o p ecision goods, o con inue a o ing Eu opean supplie s. Finally, ansi ioning
la ge po ions o global supply chains o India will equi e ime and inc eased e iciency o he coun y o ully
capi alize on eme ging oppo uni ies.
Global Implica ions o U.S. Ta i Shi s
The U.S.’s ecen a i inc eases, in oduced unde he “Make Ame ica Weal hy Again” policy on Ap il 2, 2025,
a e expec ed o p o oke eac ions om global ading pa ne s. These could include heigh ened a i s and e alia o y
ac ions, adding ola ili y o in e na ional ma ke s. Gi en he U.S.’s posi ion as he wo ld’s la ges economy, such ade
measu es ha e a - eaching e ec s, dis up ing global supply chains, unde mining ma ke con idence, and po en ially
d i ing up he global ola ili y index.
Conclusion
The 2025 ecip ocal a i s imposed by he Uni ed S a es p esen bo h challenges and oppo uni ies o India’s
expo ade. While sec o s such as au omobiles and elec onics will ace highe landed cos s due o a 26% e ec i e
a i , he o e all impac on India’s expo s is expec ed o be limi ed in scale, a ec ing less han 3% o o al ou bound
ade. Key sec o s like pha maceu icals emain exemp , and ex iles could gain g ound due o s eepe a i s on
compe ing coun ies. India’s lowe a i bu den compa ed o China (54%) and Vie nam (46%), combined wi h i s
g owing manu ac u ing capaci y and s a egic policy ini ia i es, and posi ions i as a iable al e na i e o U.S.
impo e s seeking supply chain di e si ica ion. While in as uc u e and a i dispa i ies wi h he EU emain a eas o
imp o emen , India’s p oac i e ade engagemen s such as he pu sui o a bila e al ade ag eemen wi h he U.S.
signal a clea in en o deepen economic ies and mi iga e isks. In summa y, he ecip ocal a i s o 2025 a e unlikely
o signi ican ly dis up India’s expo momen um. Wi h ca e ul policy calib a ion and in es men in compe i i eness,
India s ands o con e ade ic ion in o oppo uni y, ein o cing i s ole in global supply chains.
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