Deteriorating relations between the two countries, now combined with a steep 50% tariff, could fracture crucial supply chains
What you’ll learn in this article:
- How deteriorating relations have led to a doubling of U.S. tariffs on imports from India.
- Which Indian imports are irreplaceable because no other country produces them.
- Why shrimp prices could spike as a result of tariffs against India.
- How a recent court ruling could upend the entire global trading system — again.
🎯 Best for: Business leaders and strategists, supply chain managers, and other C-suite executives
On August 27, the United States imposed a crushing 50% tariff on imports from India, the steepest yet in an escalating trade war. The announcement made India the most recent hotspot in the global trade arena — yet it was merely the most recent rift amid deteriorating relations between the two countries and could fracture critical supply chains
Back in June, shortly after an extensively reported “testy” phone call between U.S. President Donald Trump and Indian Prime Minister Narendra Modi, the United States imposed 25% tariffs on the country’s imports. With those rates now doubled, U.S. importers need to take stock of their supply chains yet again.
“With India’s tariff rate now among the highest in the world, multiple sectors of the U.S. economy will feel the effects,” says ImportGenius founder and CEO Michael Kanko, noting that imports range from hand-knotted rugs all the way up to sophisticated manufactured goods. “Given the souring relationship between the two countries, businesses can probably expect high tariffs on India to last for some time.”
India’s irreplaceables: rice and rugs
India recently surpassed China as the world’s largest rice producer, thanks in part to its focus on the aromatic variety known as Basmati — a fast-growing segment of the rice industry that no other country can match in terms of production or exports.
Rice imports from India hit a record $395 million in 2024, a 123% increase in just 10 years. ImportGenius data shows that monthly Basmati shipments have risen from roughly 500 TEUs in 2020 to 1200 TEUs in 2024, reaching an all-time high in July of this year at more than 2000 TEUs — just one month before the new tariffs kicked in.
Major U.S. importers include LT Foods, makers of the Dawaat rice brand, and Riviana Foods, whose brands include Tilda and Minute Rice. “The data suggests that importers may have seen the writing on the wall, and stockpiled the product in anticipation,” says Kanko.
Handmade rugs and carpets are another import category dominated by Indian goods. In the 200 years since the Jacquard loom ushered in the era of machine-made carpets, hand-woven ones have become even more valued in home decor — and tariffs on India have now made them even more expensive.
India is the last remaining country to mass-produce hand-knotted, hand-tufted, or otherwise hand-crafted rugs and carpets. The trade employs 2 million people in that country, which supplied nearly 80% of all handmade rugs and carpets purchased in the U.S. last year, a highly competitive sector.
“This is part of what makes these tariffs a flashpoint for U.S. – India relations,” says Kanko. “Between rice farmers and carpet weavers, the tariffs are impacting millions of Indian workers in rural regions that rely heavily on trade with the United States.”
India’s replaceables: Shrimp and pharmaceuticals
Surprisingly, rice is not India’s most valuable food export to the U.S. That title goes to shrimp, whose total value reached nearly $2 billion in 2024. A multitude of companies and brands, including Chicken of the Sea and Pacific Seafood, import substantial amounts of Indian shrimp.
Because so many countries have substantial shrimp farming industries, the impact of tariffs on the shrimp market won’t be spread equally. Both Chicken of the Sea and Devi Sea Foods, the latter of which largely serves the restaurant sector, are among America’s top 5 importers of shrimp, but one company is far less reliant upon India than the other.
These two examples illustrate how diversified sourcing can help minimize tariff exposure. While one company can increase sourcing from other locations to keep tariff exposure low and prices stable, the other cannot. Ecuador, another major shrimp producer, is already eyeing increased business opportunities in the U.S. as a result of the tariffs on India.
For now, tariffs on Indian goods exclude the country’s most valuable export by far: pharmaceuticals. India exported more than $8 billion in pharmaceuticals in 2024, a significant sum, though less than such countries as Ireland, Switzerland and Germany. “Pharma is an industry where India relies more on the U.S. than the U.S. relies on India,” says Kanko.
That exemption — which applies to pharmaceuticals from all countries — is helping to keep prices affordable for consumers, hospitals and health insurers. But that could soon change. On April 1, the U.S. Department of Commerce initiated an investigation into all pharmaceutical imports under Section 232 of the Trade Expansion Act to determine if they pose any threat to national security. Once that investigation is complete, it could recommend higher tariff rates for pharmaceuticals from around the world.
The bottom line: U.S. courts signal more uncertainty ahead
Whether the 50% tariff sticks now depends on the courts. A federal appeals court recently ruled that the administration’s reciprocal tariffs were illegal, but delayed enforcement until October 27. Even if overturned, the White House has other tools to reimpose import duties. For businesses, the only certainty is uncertainty — global tariff rates could swing sharply in the months ahead.
“The global tariff storm isn’t over yet,” says Kanko. Be it stockpiling, supplier diversification or bonded warehousing, importers need to employ every tool at their disposal to shore up their supply chains and minimize tariff exposure.” In short, India has become the latest reminder that global supply chains are only as resilient as the politics that shape them.
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