Axis Bank's Neelkanth Mishra sees $10 billion hit from Trump’s 25% tariff on Indian exports

Should these tariffs rates take effect, the total duties on Indian exports would rise to $18 billion, compared to a pre-April 2025 levels, said Neelkanth Mishra

Neelkanth Mishra, Chief Economist at Axis Bank, has estimated that the US President Trump’s proposed 25 percent tariff on India, along with penalty for Russian trade could result in an incremental impact of around $10 billion, according to a note published on July 31.

Should these tariffs rates take effect, the total duties on Indian exports would rise to $18 billion, compared to a pre-April 2025 level. This estimate is $6 billion and $3 billion higher respectively than if the tariff were to be set at 15 percent or 20 percent, Neelkanth Mishra said in the note.

The financial burden is expected to intensify further once tariffs on pharmaceuticals under the Section 232 are implemented - currently at zero - and if additional punitive levies are introduced, the report added.

The most significant sectoral impact is projected on gems and jewellery, accounting for $2.6 billion of the increase in duties, followed by apparel and textiles at $1.5 billion, and mobile phones at $1.3 billion. Collectively, these three categories represent 53 percent of the total incremental impact. Other affected industries include industrial machinery, organic chemicals, and electrical machinery, each likely to face an impact of around $0.5 billion.

Although some framework agreements and letters are under negotiation, they currently cover more than 72 percent of US imports, significantly reducing India’s bargaining power. India’s official response has indicated the New Delhi is committed to negotiating a mutually beneficial and balanced bilateral trade agreement, for which talks have been underway over past few months.

However, there may be potential for a targeted fiscal support at the sectoral level as a mitigating strategy, the Axis Bank note has said.