The United States has slashed tariffs on Indian goods to 18%, delivering a major boost to India’s export competitiveness and sharply improving its standing against key regional rivals. The move follows the long-awaited India–US trade agreement, which has reset tariff structures after months of negotiations and elevated India’s position in the American market.
The revised tariff marks a sharp rollback from the punitive duties imposed earlier, when Indian exports were among the most heavily taxed by the US. At one stage, tariffs on Indian goods had climbed to 50%, combining a base duty with additional penalties linked to geopolitical concerns. The new rate of 18% places India well below several competing exporters across South Asia and Southeast Asia.
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India gains ground against neighbours
With the new tariff structure, Indian exporters now enjoy a clear advantage over neighbouring and competing economies. Goods from Bangladesh and Sri Lanka continue to face 20% tariffs in the US market, while Pakistan is subject to a 19% duty.
Across Southeast Asia, exporters from Vietnam and Taiwan face tariffs of 20%, while Malaysia, Thailand and Philippines remain at 19%. Indonesia also faces a 19% levy.
Trade analysts say this relative tariff gap could prove decisive in labour-intensive sectors such as textiles, apparel, gems and jewellery, and light engineering, where price sensitivity plays a crucial role in securing US orders.
China faces the heaviest blow
The starkest contrast is with China, which continues to face tariffs of up to 37% on its goods entering the US. This wide differential significantly improves India’s competitive positioning vis-à-vis Chinese exporters, especially in categories where both countries vie for the same buyers.
Other countries facing steep US tariffs include Myanmar and Laos, both at 40%, South Africa at 30%, Mexico at 25%, and Canada at 35%.
By comparison, exporters from Switzerland face a 15% tariff, while the United Kingdom enjoys a relatively low 10% duty. Japan, South Korea and countries in the European Union operate under prior agreements that keep tariffs around 15%.
From highest to competitive
Before the current agreement, India ranked among the large economies facing the highest US tariffs, alongside Brazil. The sharp cut to 18% marks a dramatic turnaround and is being viewed as a structural positive for India’s export outlook.
Trade experts note that the tariff reset could encourage US buyers to diversify sourcing toward India, particularly at a time when global supply chains are being reconfigured to reduce overdependence on a single country.
Long road to the deal
Negotiations on a bilateral trade agreement between India and the US began nearly a year ago and went through multiple rounds, including in-person talks and subsequent virtual discussions. While some elements of the agreement are expected to be phased in gradually, the tariff cut has emerged as the most immediate and market-moving outcome.
What it means for exporters
Exporters believe the lower tariff regime will improve margins, support volume growth and strengthen India’s case as a reliable long-term supplier to the US. However, they caution that sustaining the advantage will depend on execution, logistics efficiency and the ability to scale production.
For now, the 18% tariff has clearly altered the competitive equation—placing India ahead of several regional rivals and significantly closer to developed-market exporters in the race for the world’s largest consumer market.
About the author – Ayesha Aayat is a law student and contributor covering cybercrime, online frauds, and digital safety concerns. Her writing aims to raise awareness about evolving cyber threats and legal responses.
