India-US Trade Deal: What Will Get Cheaper & Costlier? From Garments, Laptops To Dairy, Full List Of Items

India and the US have finally met eye-to-eye, with both President Donald Trump and Prime Minister Narendra Modi agreeing on a trade deal that benefits their countries. The months-long feud that pushed India to face a whopping 50% tariff is gone now. Because Trump has slashed reciprocal tariffs from 25% to 18%, while abolishing the additional 25% punitive tariffs. All goods from India will face just 18%. This will make a host of products cheaper.

US-India New Tariffs:

Trump has announced that the US will reduce reciprocal tariffs from 25% to 18% with immediate effect on February 2, 2026. This will eventually lead to scrapping of the additional 25% tariffs that were imposed in August last year.

Before the 18% tariffs, US duties reached 50% on Indian goods and services. This included a 10% baseline and 15% reciprocal, making 25%, plus an additional 25% punitive duty imposed with effect from August 27, 2025.

Now, the additional 25% punitive duty is removed and 25% reciprocal tariffs is reduced to 18%. Accordingly, US tariffs on Indian exports is chalked down to 18% on most of Indian goods.

Further, the US is looking to bring down the tariffs to zero in the future. The big cuts in India-US trade tariffs come as major good news for both countries, whose total bilateral trade (goods and services) reached $132.2 billion in FY25.

India-US Trade Deal: What Will Get Cheaper?

Retail prices of major products are expected to fall in due course. These include minerals, fuels & oils, aircraft and military equipment, agricultural products, tech hardware and components, consumer products, textile products, pharma items, and gems & jewelry exports, among others.

1. Agricultural Products: These include pulses, dairy, and processed foods.

2. Technology-related components and hardware like laptops, gadgets, and electronics.

3. Consumer goods such as processed foods, packaged goods, appliances, and others could see their prices fall.

4. Aircraft and Aerospace Equipment: Boeing, Lockheed Martin, and Northrop Grumman are some of the top exporters from USA serving to India's aviation industry.

5. Plastics: Products like plastic polymers, produced plastic goods, and semi-finished plastic products. USA Exports polyethylene, polypropylene, PVC, PET, plastic packaging products, and industrial plastic components.

6. Medical Equipment and Pharmaceuticals: India imports many American medical equipment and drugs including medical devices, diagnostic equipment, and life-saving medications.

7. Defense and Security Equipment: India imports various defence related products such as defense and security equipment including military gear, surveillance systems, and armament.

8. Oil and Petroleum Products: India has increased its oil imports from US since last year. These include crude oil, refined petroleum products, and liquefied natural gas (LNG).

These are some of the products India imports from the USA.

India's Exports to the USA (USD billion)
Product Description	CY2024	CY25 (Jan-Sep)
Overall Exports	80.8	72.5
Electrical machinery & equipment	12.6	19.7
Pearls, precious & semi-precious stones, precious metals	9.3	5.7
Pharmaceutical products	8.9	7.7
Nuclear reactors, boilers, machinery & parts	6.6	5.5
Mineral fuels & oils	4.4	3.3
Articles of iron or steel	3.0	2.5
Other made-up textile articles	2.9	2.2
Vehicles (non-railway) & parts	2.7	1.9
Organic chemicals	2.6	2.1
Apparel (not knitted or crocheted)	2.6	2.1
Apparel (knitted or crocheted)	2.6	2.0
Fish & other aquatic invertebrates	2.0	1.4
Plastics & articles thereof	1.6	1.2
Miscellaneous chemical products	1.3	1.1
Carpets & textile floor coverings	1.2	0.9
Furniture, bedding & furnishings	1.2	0.9
Articles of stone, cement, plaster, etc.	0.9	0.6
Rubber & articles thereof	0.9	0.7
Optical, medical & precision instruments	0.9	0.9
Aluminium & articles thereof	0.9	0.8

(Data Source: WTO, Elara Securities Research)

What Will Get Cheaper For Indian Exports To US:

India's exports to the US majorly include engineering goods, electronic goods, gems and jewelry, pharmaceutical products, light crude oil and petroleum, electrical goods, and others.

India's Imports from the USA (USD billion)
Product Description	CY2024	CY25 (Jan-Sep)
All Products	43.1	35.5
Mineral fuels, mineral oils & products of their distillation	13.2	12.5
Pearls, precious & semi-precious stones, precious metals	4.9	3.0
Nuclear reactors, boilers, machinery & mechanical appliances	4.1	3.6
Electrical machinery & equipment	3.1	3.4
Optical, medical & precision instruments	2.0	1.6
Plastics & articles thereof	1.6	1.1
Aircraft, spacecraft & parts thereof	1.4	0.3
Organic chemicals	1.3	1.2
Miscellaneous chemical products	1.2	0.9
Edible fruit & nuts	1.1	1.1
Ships, boats & floating structures	1.0	0.0
Aluminium & articles thereof	0.9	0.6
Iron & steel	0.9	0.6
Pulp of wood & recovered paper	0.7	0.6
Vehicles (non-railway) & parts	0.6	0.5

(Data Source: WTO, Elara Securities Research)

What Will Continue To Be Expensive?

According to reports, steel, aluminum copper will continue to face higher tariffs of 50% under U.S. Section 232 duties. Also, some auto components will face 25% tariffs.

India-US Trade Deal: Sectors To Benefit

Garima Kapoor, Economists at Elara Capital highlighted that among the key export sectors, gems/jewellery (11.5% of CY24 exports to US), textiles/apparels (3.2% avg), machinery/equipments (8.1%) are immediate beneficiaries.

Since tariffs under section 232 are still in motion, the economist said that they do not see automobiles (3.3% share of CY24 exports) not seeing any respite. With US economic growth expected to stay robust for a major part of CY26E, combined direct and indirect gains can be more than expected, leading to positive spillovers on India's key export players' earnings for FY27.

However, the economist also points out that while the details are yet to surface, India agreeing to buy $500 billion of US imports in energy, technology, agricultural, coal claimed by the US President, can raise some concern. Increasing US energy imports or imports of Venezuela oil (lower grade than others) may limit gains due to cheaper Russian crude.

Hence, market will monitor the upcoming developments and expect that India is likely to follow the FTA rulebook.

India-US Trade Tariffs History: List of Indian Products Impacted by US Tariff Rates After Trump Came In To Power

Product Category	Tariff Rate (Aug 7, 2025)	Tariff Rate (Aug 27, 2025)
Textiles & Apparel	25%	50%
Gems & Jewellery	25%	50%
Leather & Footwear	25% (20.8-29.51% for footwear)	50% (45.8-54.51% for footwear)
Marine Products	33.26% (25% + 2.49% anti-dumping + 5.77% countervailing)	58.26% (50% + 2.49% + 5.77%)
Chemicals (Organic)	25%	50%
Automobiles & Auto Parts	25%	50%
Iron, Steel & Aluminium	25% (5-12.5% for industrial goods)	50% (30-37.5% for industrial goods)
Agricultural Products	25% (e.g., onions at 25.54%)	50% (e.g., onions at 50.54%)
Machinery & Engineering Goods	25%	50%
Ceramic, Glass & Stone	25%	50%
Rubber Items	25%	50%
Paper & Wood Products	25%	50%
Furniture	25%	50%
Dairy Products	56.46% *(buttermilk, fermented milk); 30.84% (milk powder)	81.46%; 55.84%
Pharmaceuticals	0%	0%
Electronics & Semiconductors	0%	0%
Energy Products	0%	0%
Critical Minerals	0%	0%