The U.S. government has imposed a 25% tariff on Indian exports, including chemicals. This move is transforming export dynamics, reshaping margins, and creating both risk and opportunity for India’s chemical industry in 2025–26.
A flat tariff of up to 26% on chemicals exported from India to the U.S. has sharply increased prices for American buyers. This surge in duty undermines the price advantage Indian chemical suppliers once held. Products like acetic acid, ethyl acetate, and solvents now face higher costs.
In FY24, chemicals worth US $5.7 billion were exported to the U.S., making up nearly 18% of India’s total chemical exports. Analysts estimate the tariff could dent export earnings by $2–7 billion annually, with specialty chemicals and intermediates being the hardest hit.
Across India, small and mid-sized chemical firms, responsible for ~65% of export volume, are facing squeezed margins. Many may choose to absorb part of the tariff to avoid losing U.S. clients, putting profitability at risk.
India faces lower tariffs compared to competitors: China sees a 34–54% levy, Vietnam 46%, while India's stands at 26%. This gives Indian exporters a chance to win new contracts and market share, if they can scale efficiently.
In response, India is pursuing export support measures, interest subsidies, and exploring alternate markets like ASEAN and Latin America. Ongoing U.S.–India talks may lead to exemptions or relief by late 2025.
Tariffs threaten growth in 2025–26, but strategic adaptation can safeguard exports. Companies must diversify markets, streamline cost structures, and actively engage in trade negotiations to navigate this turbulent period. However, in the near term, expect delays, price hikes, and volatility.