US hikes India tariffs to 50%, putting focus on key food, fuel, feedstock trade flows

The US has imposed an additional 25% tariff on all Indian goods, doubling the effective duty rate to 50% on one of America's largest trading partners.

The move throws a spotlight on India's export sectors spanning biofuels, dairy, proteins, and refined petroleum.

US President Donald Trump announced the tariff Aug. 6 in an executive order, days after the White House announced a 25% baseline tariff and "Russia penalty" on India.

With this latest action, nearly all Indian exports — including food, fuel and feedstock commodities — now face among the highest US trade barriers globally.

New tariffs will apply to all Indian goods entering the US starting 21 days after signing, excluding those in transit, according to the order.

Ags, dairy, biofuels

The new 50% rate impacts key Indian agri-food and processing segments like shrimp, rice, guar gum, processed pulses, spices and plant proteins — commodities that rely on competitive pricing and tight logistics into US ports.

India has long maintained steep import barriers on US-origin grain, dairy, and ethanol, including tariff-equivalent barriers on ethanol, 30-50% on whey, cheese, and milk powder and stringent SPS norms and labeling rules on corn, poultry, soymeal.

These were among the specific "obnoxious" trade practices cited by Trump in his tariff rationale.

US dairy and corn trade groups have repeatedly flagged India's market as closed, while India defends its stance as protecting small farmers.

Indian industry groups warn that this tit-for-tat posture risks undermining India's $87.4 billion export flow to the US, particularly its $5 billion processed food and protein export segment.

Refined fuels, SAF, ethanol

India's growing role in global refined fuels trade is also under pressure. In 2023, India exported $5.15 billion in refined petroleum products to the US, making it the fifth-largest supplier, according to US Energy Information Administration.

These products now face a 50% duty, undermining the competitiveness of Indian cargoes relative to Persian Gulf and US Gulf Coast refiners.

India has ambitions for a 27% ethanol blend mandate domestically. US refiners were seen as potential partners in offtake, technology, and compliance — a pathway that now looks blocked.

Proteins, feed additives

India's exports of plant proteins and animal feed inputs, such as guar meal, soy derivatives, lecithin, and processed pulses, will likely see steep pricing pressure.

India exported $2 billion of shrimp to the US in fiscal 2025, capturing 9.5% of the market, said Ajay Srivastava, founder of Global Trade Research Initiative. Now those flows face a 50% duty while "Canadian seafood continues to enter duty-free. Chile, another big supplier, faces only 10% tariffs."

"So exports will face headwinds," Srivastava said.

These products serve key end-uses in US protein markets — from pet food and aquaculture to alt-protein and nutritional ingredients.

"This move is a severe setback for Indian exports, with nearly 55% of our shipments to the US market directly affected," said Federation of Indian Export Organisations President S C Ralhan. "The 50% reciprocal tariff effectively imposes a cost burden, placing our exporters at a 30-35% competitive disadvantage compared to peers from countries with lesser reciprocal tariff."

Ralhan added that many export orders have already been put on hold as buyers reassess sourcing decisions in light of higher landed costs. For a large number of sectors led by micro, small, and medium enterprises, absorbing this sudden cost escalation is simply not viable.

"Margins are already thin, and this additional blow could force exporters to lose long-standing clients," Ralhan said.

Trade realignments

The latest trade rupture arrives amid already fragile US-India relations. India has previously pushed Washington to lower tariffs on leather, textiles, ethanol, and gems, while the US has sought greater access to India's food, fuel, and tech markets.

A senior Indian trade official, speaking on background, told Platts that the escalation "complicates defense and energy diplomacy" and hinted at pivoting toward Europe, Gulf and East Asian buyers for commodity diversification.

Meanwhile, the Reserve Bank of India lowered its growth forecast to 6.5% on Aug. 6, citing global trade uncertainty and tariff shocks. Governor Sanjay Malhotra warned that "external headwinds" remain unpredictable, though India's fundamentals remain strong.

"Prospects of external demand remain uncertain amidst ongoing tariff announcements and trade negotiations," he said.

Brazil, which also faces a 50% tariff on exports to the US, said it plans to rally global opposition to Trump's tariff policy, which now includes duties on coffee, beef, and petrochemicals. President Luiz Inacio Lula da Silva said he would reach out to India's Modi for trade talks.