US's 50% Tariffs on India: How Exporters Can Pivot to the UK

On 27 August 2025, the United States stunned global trade by announcing a 50% tariff on most imports from India.

For many, tariffs feel like distant government policy. But this one made itself felt almost immediately — on both sides of the world.

In India, exporters were thrown into confusion. Orders from long-time American buyers suddenly looked uncertain. Business owners asked: Will shipments already at sea be caught up in this? What happens to contracts we’ve just signed? With payroll deadlines looming, those questions carried real weight.

Across the US, retailers began preparing for disruption. Supermarket owners in cities like Houston, New York and San Jose received urgent notices from suppliers. Some started bracing for price hikes, while others scrambled to adjust stock. For many American families, the news raised an everyday question: Will the rice, spices or clothes we buy each week cost more?

What makes this tariff different is how quickly its impact spread. Financial crises usually creep in but this landed like a boulder in a pond. Both Indian and US businesses were forced to begin adapting overnight.

So, it’s worth understanding what caused this situation and what, if anything, India can do now.

Why Were the Tariffs Imposed?

These high tariffs didn’t come out of nowhere. They have a backstory rooted in geopolitics.

The story begins in early 2022, when Russia invaded Ukraine. This war reshaped global politics, particularly in the realm of energy. Oil and gas are Russia’s largest sources of income, and Western countries, including the United States, wanted to limit this income so that Russia would struggle to fund its military. To do this, they imposed sanctions (rules and restrictions designed to make it harder for Russia to sell oil and do business internationally).

But not every country joined in. India faced a tough choice. As one of the world’s largest and fastest-growing economies, it needs a constant and affordable supply of energy. Russian oil, sold at discounted prices, was too attractive to give up. India kept buying, arguing that it was acting in its own national interest and that energy security for its people had to come first.

This didn’t sit well with Washington. For the next three years, American officials kept asking India to reduce its purchases of Russian oil. Indian negotiators pushed back, saying their country had the right to make decisions based on its own needs. Meanwhile, trade experts around the world debated if the US would tolerate India’s position or if it would retaliate.

By August 2025, the US had decided to act. Washington announced a sweeping 50% tariff on most Indian goods. The purpose was clear: to punish India for what the US saw as undermining the global sanctions against Russia.

The timing of the decision was also important. It was announced and enforced almost immediately, just days before the end of the month. This meant businesses had no time to prepare.

Both sides went into hyperdrive.

In India, government ministries called emergency meetings with export councils and trade associations to discuss how to soften the blow. Could subsidies, tax relief or new markets help?
In the US, retailers and wholesalers began urgent reviews of their supply chains. Which products would rise in price first? Would some items simply vanish from shelves?

Everyone quickly understood this was not just a temporary setback. It signalled a fundamental change in trade relations between the US and India, and one that could reshape how businesses and households in both countries operate in the years ahead.

What Goods Are Hit?

The new tariffs cover a wide range of goods, touching nearly every major sector of India’s exports to the United States. Textiles are among the most vulnerable, from high-end fashion garments to everyday cotton clothing that fills American wardrobes. Jewellery and precious stones, including gold and diamonds, that stock both retail chains and independent stores, are also directly in the line of fire. Food is another key area, with processed products, spices, rice and seafood suddenly facing new costs at the border. Beyond consumer items, industrial goods such as machinery, auto parts and manufactured components are also caught in the dragnet. For many of these industries, the US market isn’t just one option among many, it represents years of investment in product design, packaging and logistics built specifically for American buyers.

In India, industry groups are scrambling to assess the damage. Some factories believe they can continue operating in the short term, but warn that even a slight dip in orders could force them to cut back on production schedules sharply. Jewellery exporters, who depend heavily on US demand, are now meeting daily to review contracts and track shipment deadlines. In southern India, seafood producers are trying to determine whether shipments already at sea will be taxed upon arrival or whether exemptions will apply to goods that left before the tariffs were imposed.

The potential impact on workers is perhaps the most immediate concern. Across India, small garment workshops and parts manufacturers employ hundreds of thousands of people. These jobs are built on the stability of steady export flows. Local news outlets are already reporting that some managers have frozen hiring, while workers are pressing for clarity on shifts, overtime and pay. The coming weeks will reveal just how far and how fast these effects ripple through communities that depend heavily on export income.

On the American side, the situation looks different but no less serious. Large retailers may be able to adapt by shifting to alternative suppliers in Bangladesh, Vietnam or parts of Africa. Smaller businesses, however, have far less flexibility. Many rely on long-standing Indian partners and do not have quick replacements at hand. For them, the risk is immediate – higher prices, thinner profit margins and, in some cases, the possibility of running out of stock altogether.

In short, these tariffs are not simply about trade figures or government policies. They are about the products on shop shelves, the workers on factory floors and the households in both countries that will feel the consequences directly.

How Has India Responded?

In the wake of the tariffs, the Indian government has swiftly implemented a comprehensive set of measures aimed at mitigating the immediate impact on exporters and workers, while also laying the groundwork for long-term resilience.

To address the immediate financial challenges, the government has introduced the following support mechanisms:

Emergency Credit Lines – Providing exporters, especially small and medium-sized enterprises (SMEs), with access to low-interest loans to manage cash flow disruptions.
Loan Moratoriums – Allowing exporters to defer loan repayments, offering temporary financial relief during the adjustment period.
Export Realization Period Extensions – Extending the time frame within which exporters must repatriate export proceeds, providing flexibility in managing international transactions.

Similarly, recognizing the need for operational agility, the government has undertaken several other initiatives like:

Easing Special Economic Zone (SEZ) Norms – Implementing reforms to make SEZs more attractive for exporters, including simplifying regulatory requirements and providing tax incentives.
Promoting Import Substitution – Encouraging domestic production of goods that were previously imported, reducing dependency on foreign markets and improving trade balance.
Developing E-Commerce Export Hubs – Establishing platforms to facilitate online exports, expanding market reach and tapping into global digital trade opportunities.

Looking beyond immediate relief, the government is focusing on structural reforms outlined below to enhance long-term resilience:

Diversification of Export Markets – Encouraging exporters to explore new markets in Latin America, Africa, Southeast Asia and the European Union, to reduce dependency on the US.
Strengthening Domestic Supply Chains – Investing in infrastructure and technology to bolster domestic production capabilities and reduce vulnerabilities in the supply chain.
Capacity Building & Skill Development – Implementing programs to enhance the skills of the workforce, ensuring they are equipped to meet the demands of evolving global markets.

Likewise, in response to the larger trade tensions with the US, India is strengthening ties with other nations:

Engagement with China – During the Shanghai Cooperation Organisation (SCO) summit, Indian Prime Minister Narendra Modi and Chinese President Xi Jinping emphasized their partnership, aiming to enhance trade and reduce India’s trade deficit with China.
Strengthening Relations with Russia – Prime Minister Modi also met with Russian President Vladimir Putin to reaffirm their “special and privileged” strategic partnership, discussing energy cooperation and bilateral trade.

Indian officials have also made public statements to show India’s stance on the issue:

Minister’s Statement – Minister for Commerce and Industry Piyush Goyal emphasized that India would not “bow down” to the US and was open to free trade agreements with other countries, signaling a shift towards diversifying trade partnerships.

These measures reflect India’s concern over the impact of the US tariffs and prioritising of the stability of its export sector.

Could & Should Indian Exporters Start Looking at the UK?

Now, as Indian exporters are dealing with the shock of the US tariffs, maybe it’s time their attention turns to the other English-speaking nation of the West, whose name starts with the word “United” – the United Kingdom.

India and the UK have had a Comprehensive Economic and Trade Agreement (CETA) since July this year. Although it was finalized before the US tariffs, the agreement has now become relevant as Indian businesses seek new avenues to maintain competitiveness in global markets.

The CETA removes or significantly reduces tariffs on almost all Indian goods entering the UK, including those impacted by the latest US tariffs like textiles, jewelry, machinery, electronics and food products. For Indian businesses, the UK now represents a viable and accessible market at a time when the US has become costly and uncertain.

British distributors and retail chains are actively reaching out to Indian exporters, eager to secure steady supplies. At the same time, the UK’s advanced logistics infrastructure, modern customs systems and digital-first documentation make shipments faster and less administratively burdensome, helping Indian businesses adapt quickly.

The agreement also eases the movement of skilled professionals between India and the UK. Indian experts in IT, engineering, architecture and medicine can now take assignments in the UK with simpler visa procedures and mutual recognition of qualifications. Social security rules for temporary postings are streamlined, allowing professionals to avoid paying duplicate National Insurance contributions for up to three years. This makes it easier for companies to deploy talent internationally without incurring excessive costs or administrative delays.

Economically, the FTA is expected to strengthen bilateral trade and encourage investment. Both India and the UK aim to significantly increase trade, with long-term targets to double trade to $120 billion by 2030. For Indian exporters, the agreement provides a practical means to diversify away from the US market and explore new opportunities across Europe. The Indian Ministry of Commerce identifies the UK as a top-priority alternative market, while trade associations actively engage with British counterparts through webinars, exhibitions and collaborative ventures to establish new partnerships.

Overall, the India-UK CETA offers a timely and strategic lifeline for Indian exporters. While the US tariffs create immediate challenges, the FTA provides tariff-free access, streamlined professional mobility and a stable trading framework, allowing businesses to mitigate risks, pivot quickly and continue growing even amid global trade disruptions. Its relevance highlights the importance of market diversification and positions the UK as a key partner for Indian trade in real time.

What Does Britain Offer? Stability, Openness & Future

While the India-UK Free Trade Agreement can be viewed as an avenue to mitigate the worst impacts of the American trade disruptions, it actually represents something far greater – a forward-looking strategy built on lessons from previous negotiations and designed to meet the needs of modern commerce.

Beyond eliminating tariffs on the majority of manufactured goods and agricultural products, the India-UK agreement strengthens intellectual property protections, simplifies regulatory approvals and opens certain government procurement opportunities to Indian firms. It also encourages cross-border collaboration in sectors such as technology, finance and clean energy, while establishing clear and reliable dispute resolution mechanisms. These provisions provide Indian exporters with legal certainty, operational predictability and practical avenues to safeguard their business interests.

For Indian companies considering expansion, the UK market offers a combination of stability, wealth and diversity that few other markets can match. British consumers consistently show strong demand for high-quality goods, with a growing appetite for international brands. Local distributors and business networks are known for their professionalism and reliability, providing a dependable supply chain that Indian exporters can trust. On top of that, the UK’s strategic location and highly developed logistics hubs make it possible for companies to extend their reach into continental Europe efficiently, avoiding the extra costs and delays often associated with cross-border trade.

The agreement also addresses a critical aspect of modern business: professional mobility. Skilled Indian professionals in IT, engineering, architecture and healthcare can now work in the UK under simplified visa procedures and with mutual recognition of qualifications. Social security arrangements for temporary postings are streamlined, so professionals can contribute to projects without unnecessary duplication of payments. For companies, this removes a major barrier to sending staff abroad, allowing them to operate more flexibly and respond quickly to market opportunities.

Britain’s post-Brexit strategy emphasizes openness, transparency and support for international partners. Companies entering the UK market can access government-backed guidance on compliance, certifications and market entry, while industry associations offer resources, networking opportunities and trade exhibitions to help businesses establish themselves quickly. For exporters who have relied heavily on the US market, this represents a moment to rethink assumptions and diversify risk. It is not merely a stopgap but a chance to build long-term, resilient relationships that can withstand future trade uncertainties.

In practical terms, Indian businesses can use the UK as a launchpad. By leveraging tariff-free access, robust legal frameworks, professional mobility provisions and efficient logistics, companies can stabilize revenue streams disrupted by the US tariffs and strategically position themselves for growth across Europe. The agreement transforms the UK from a convenient alternative into a strategic hub, a base for innovation, market expansion and sustainable international trade. In an era of global economic uncertainty, this combination of regulatory clarity, market access and institutional support makes Britain a uniquely attractive and future-proof destination for Indian exporters ready to act now.

How to Get Started in the UK

Transitioning to a new market is challenging and the pressure is even greater when businesses are responding to sudden global trade changes. Success requires more than planning. It demands expert guidance, practical tools and a clear understanding of local legal, financial and regulatory requirements. In the UK, accounting and advisory firms with experience in international trade play a crucial role in helping overseas businesses navigate these complexities efficiently. One such firm is Sterling & Wells, widely recognised for supporting new market entrants and ensuring that companies can establish operations smoothly without unnecessary delays or bureaucratic complications.

Sterling & Wells provides comprehensive, hands-on guidance that spans the entire process of setting up and running a business in the UK. This includes company formation and registration, ensuring that all legal structures meet both local regulations and international compliance standards. The firm also offers tax planning and compliance services, tailored to the needs of businesses engaged in international trade, helping companies minimise liabilities while adhering to UK law. On the operational side, Sterling & Wells assists with customs procedures, import/export certifications and VAT documentation, ensuring that products move across borders efficiently and without unexpected costs. Additional support covers payroll management, financial reporting and strategic growth planning, giving companies the tools to scale effectively while maintaining regulatory compliance.

For Indian businesses or other overseas firms adjusting to a new trade landscape, Sterling & Wells acts as a bridge between ambition and execution. Its online consultation system is simple and accessible, fee structures are transparent and every client benefits from a personalised approach designed to address specific industry needs. Manufacturers, technology companies, service providers and distributors alike have leveraged this expertise to move from strategic planning to operational reality with confidence.

Beyond day-to-day services, Sterling & Wells keeps clients informed about ongoing regulatory developments and government programs for exporters. The firm actively facilitates connections to trade resources, market research and networking opportunities, helping companies not only comply with UK requirements but also understand cultural expectations and business norms. For many businesses, this kind of expert support is the difference between uncertainty and confident expansion, providing reassurance that entering the UK market can be both feasible and profitable, even amid broader global trade disruptions.

Short-Term Unknowns & Long-Term Lessons

With the US tariffs barely a week away, much about their impact remains uncertain. Immediate changes for many businesses may be modest, but more significant effects are likely to emerge over the coming months as companies, governments and consumers adapt to the new trading environment. What is clear, however, is that global markets are dynamic and those who are willing to learn quickly, pivot strategies and embrace flexibility will be in the strongest position to recover and thrive.

Experts anticipate that the autumn of 2025 will bring a series of adaptation stories. Indian exporters are exploring improved trade flows with the UK, taking advantage of the recently concluded Free Trade Agreement to secure contracts and stabilise revenue streams. Companies are reorganising operations around resilience rather than dependence on a single market, retraining staff to meet changing production requirements and reviewing supply chains to identify vulnerabilities.

The US market remains more uncertain. Analysts caution that price increases or product shortages are not inevitable, but they are possible if alternative suppliers fail to step in quickly. Meanwhile, American businesses and consumers may push for new negotiations or regulatory adjustments should the initial disruptions prove severe. Exporters and importers on both sides are closely monitoring developments, adjusting contracts and exploring contingency plans to mitigate sudden shocks.

For Indian exporters, the lesson is clear: diversification is now essential. Maintaining robust partnerships in the UK, exploring new ventures across Europe and strengthening trade relationships with countries across the world are rapidly becoming the new standard for sustainable international business. Those who act quickly to expand markets, build alternative supply chains and embrace flexibility are likely to emerge from this period of uncertainty stronger and better positioned for long-term growth.

Conclusion

No one can say exactly how long the US tariffs will last, or whether further changes are on the horizon. But what’s clear is that the India–UK partnership can provide relief to businesses and industries jolted by the US.

By placing stability, mutual trust and clear benefits at the center of its trade policy, Britain offers exporters a source of confidence even in volatile times. Indian businesses agile enough to seize this chance will find not merely survival, but growth, innovation and long-term rewards.

Frequently Asked Questions

Which Indian sectors are most affected by the new US tariffs?
Indian exporters in key sectors — textiles, jewelry, furniture, processed foods and industrial goods — are most affected.
Are any Indian products exempt from the tariffs?
Yes. Pharmaceuticals, some medical devices and most IT products remain exempt due to longstanding trade agreements and critical roles in US healthcare and technology.
Why is the UK better than other alternatives to the US market?
The UK offers tariff-free access, simplicity and a supportive environment unlike any other major market. India and Britain’s FTA brings long-term stability, modern customs and business-friendly regulations.
What can Sterling & Wells do for Indian businesses entering the UK?
From tax structuring and customs compliance to market entry logistics and expansion planning, Sterling & Wells provide expert, practical support for every step of business development, ensuring growth and protecting against regulatory pitfalls.
Should Indian businesses expect quick wins by trading with the UK?
Yes. Tariff reductions and mobility schemes are already in effect, with long-term benefits rolling out over the coming year. Firms that act decisively—especially with the expertise of Sterling & Wells—can expect rapid, sustainable gains.