Despite US tariffs, India faces lower trade disadvantage than South Asian rivals

Tariffs won't hurt India as much

Despite the United States levying higher tariffs on imports from India at 25 percent, a Moneycontrol analysis of effective tariff rates suggests that India may still be better positioned than many of its South Asian peers.

In 2024, Indian goods faced an average effective tariff of 17.4 percent in the US—lower than what Bangladesh (19.9 percent), Pakistan (18.1 percent), and Sri Lanka (19.2 percent) faced.

“Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country… INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST,” said President Donald Trump on his social media platform on July 30.

India’s tariff differential with the US stands at 11.3 percentage points, well below the 17.2-point gap for Bangladesh, 13.6 points for Pakistan, and 13.0 points for Vietnam. For instance, while Bangladesh faces the highest US tariff burden, it imposes one of the lowest tariffs on US goods, creating the widest asymmetry in trade terms.

Other Asian economies such as Thailand and the Philippines fare better in terms of tariff differential—with gaps of 6.4 and 9.8 percentage points, respectively. However, their export portfolios to the US focus more on intermediate and electronics goods, differing from India’s mix of pharmaceuticals, textiles, jewellery, and consumer goods.