America’s New Tariffs and Their Impact on India’s Grocery & FMCG

9/6/2025 11:28:00 AM   KanWhizz Team   

In today’s global economy, trade measures taken by one country can affect industries of other.The United States’ recent decision to introduce new tariffs, aimed at protecting local industries and reshaping trade dynamics, could indirectly impact India’s grocery and fast-moving consumer goods (FMCG) sector.

US tariffs on India and other countries

Following President Donald Trump's return to office in 2025, the U.S. implemented a new "reciprocal tariff" policy that has led to sweeping tariffs against many countries, including a 50% tariff on India

U.S. tariffs on India

The U.S. tariffs on India were increased in two main phases in 2025: 

August 1, 2025: A 25% tariff on Indian imports went into effect.

August 27, 2025: An additional 25% tariff was added, bringing the total duty on many Indian products to 50%.

This secondary tariff was explicitly imposed as a penalty for India's continued purchase of Russian oil. 

Key affected Indian goods: 

Textiles and apparel

Gems and jewelry

Leather and footwear

Automobiles and auto parts

Certain agricultural and marine products 

Exemptions: Pharmaceuticals, semiconductors, energy products, and critical minerals are exempt from the additional tariffs. 

U.S. tariffs on other countries

The "reciprocal tariff" policy, initiated on April 2, 2025, involves a baseline tariff plus country-specific increases, hitting over 90 nations. 

China

Initial tariffs: U.S. tariffs on Chinese goods escalated throughout 2025, reaching as high as 145% in a trade-war spiral.

Current status: On August 12, 2025, the U.S. and China agreed to a temporary truce. The current tariff rate on Chinese goods is capped at 30%, but this is set to increase to 30% on November 10, 2025, if no further deal is reached. 

Brazil

High tariffs: Brazil, like India, faces a high tariff rate of 50% on certain products.

Specific products targeted: A 50% tariff was imposed on select Brazilian goods, especially semi-finished copper imports, effective August 1, 2025. 

Canada

Varied rates: Canada faces different tariff rates depending on the product.

35%: On most goods.

10%: On energy and potash.

0%: On products covered by the USMCA (United States-Mexico-Canada Agreement). 

European Union (EU)

Reduced rate: The EU reached a deal with the U.S. to lower its reciprocal tariff rate from an announced 20% to 15%.

Varying rates: Some goods from the EU now face zero tariffs, including aircraft and components, select chemicals, and certain agricultural materials. 

Japan and South Korea

Negotiated rate: Both Japan and South Korea have negotiated a 15% tariff rate. 

United Kingdom (UK)

10% tariff: The UK faces a 10% tariff on its imports. 

Legal challenges

The reciprocal tariff policy is facing legal challenges within the U.S.: 

International Emergency Economic Powers Act (IEEPA): Federal courts have ruled that the tariffs imposed under this act were an overreach of presidential authority.

Ongoing appeal: The tariffs, however, remain in effect as the administration appeals the ruling to the Supreme Court. 

How Tariffs Could Impact India ?

India’s FMCG market is among the fastest-growing worldwide, supported by a vast consumer base and rising urban demand. The U.S. tariffs could influence India in multiple ways:

1. Cheaper Imports for India: Exporters from tariff-affected nations like China and Vietnam may redirect their products to India. This could lower costs for Indian importers while creating stiffer competition for local brands.
2. Fresh Export Opportunities: Indian companies may benefit by supplying goods to the U.S. in categories where competitors face tariffs. For instance, Indian spice exporters, packaged food firms, and personal care brands could expand their presence.
3. Raw Material Price Swings: Many Indian FMCG firms rely on imported ingredients such as edible oils, packaging paper, and chemicals. The shifts caused by global tariffs may make these inputs more volatile in price.
4. Supply Chain Shifts: Multinational FMCG companies may rethink sourcing hubs. With U.S. tariffs limiting Chinese exports, India could emerge as an attractive alternative base.

Tariffs and Consumer Choices in India

Indian shoppers could experience several changes:

• Greater Variety: Redirected global exports may give Indian consumers access to more international brands at affordable rates.
• Price Variability: While some imported goods may become cheaper, essentials such as edible oils may see unstable pricing.
• Growth of Store Brands: Local retailers could expand their private-label products by leveraging both domestic production and diverted imports.

Challenges for Indian FMCG Players Amid Tariffs

While opportunities exist, domestic businesses may encounter hurdles:

• Profit Margin Pressure: Input cost fluctuations could hurt smaller companies more severely.
• Tougher Competition: Cheaper global imports may challenge the dominance of established Indian brands.
• Brand Loyalty Concerns: Price-conscious consumers may switch to lower-cost alternatives, weakening loyalty to local labels.

The Geopolitical Angle of Tariffs

The U.S. tariffs have implications beyond economics, potentially altering global trade alignments:

• Stronger U.S.-India Trade Links: If Indian FMCG exports capture market share in the U.S., bilateral trade could deepen.
• Rising Import Dependence: Over-reliance on redirected imports from tariff-hit countries could expose India to risks.
• Boost to Self-Reliance: The disruption may reinforce India’s push for “Atmanirbhar Bharat” (self-reliant India), encouraging local production.

Strategic Growth Amid Tariffs

To adapt, India’s FMCG and grocery sectors should consider:

1. Sourcing Diversification: Reducing dependence on a single country for key inputs.
2. Technology Adoption: Using AI-driven forecasting and digital supply chains for resilience.
3. Product Innovation: Creating sustainable, health-focused, and value-added products.
4. Expanding Exports: Leveraging tariff-driven gaps in the U.S. and Europe to enter new markets.
5. Government Support: Trade incentives and infrastructure investment to strengthen competitiveness.

The Road Ahead Under Tariffs

The long-term effects of America’s new tariffs remain to be seen, but India’s FMCG sector will inevitably feel their influence. While risks such as cost volatility and tougher competition are real, the scope for growth is equally strong. Firms that adapt quickly by innovating and expanding globally will be better positioned for success.

For Indian consumers, the changes may mean more choice and competitive pricing, though with occasional instability. For businesses and policymakers, this is an opportunity to reposition India as an active player in global FMCG trade.

Conclusion

Though India is not directly targeted, U.S. tariffs could reshape its FMCG sector. Cheaper imports, new export channels, and altered supply chains are all part of the emerging picture. Indian firms that focus on resilience, innovation, and global integration will gain a competitive edge. For consumers, the result could be a more diverse marketplace, albeit with some pricing fluctuations. Ultimately, India’s ability to adapt will determine whether these global changes become a challenge or a stepping stone toward leadership in the FMCG space.