Trump’s Tariffs Could Disrupt How Indian Goods Reach The US

A new tariff twist from Washington is threatening to hit not just the Indian exporters, but also the very routes their goods travel.

Starting August 7, the Donald Trump administration will impose a 25% import duty on certain Indian products, escalating its trade rhetoric ahead of the US elections. The White House claims India hasn’t been granting American companies fair access, prompting retaliatory tariffs aimed at everything from engineering goods to auto components and homeware.

On August 6, Donald Trump announced an additional 25% import duty on Indian goods, effective 21 days from the order, for all items imported or cleared for US consumption.

While headlines have focused on how this will affect exporters, the deeper and less visible disruption may be in how Indian goods now move, by air or by sea.

Behind the scenes, cargo airlines, shipping lines and freight forwarders are already recalibrating. With export margins under pressure, even a small shift in mode of transport can make or break a deal.

Goods from India often go to the US by air or sea. Air cargo is faster but costlier, while sea transport is slower but cheaper. With prices already rising due to tariffs, businesses are looking to cut costs wherever they can — and that may start with how they ship.

“The moment tariffs go up, the total cost of the product for the buyer — called landed cost — also goes up. To offset this, businesses may shift from air freight to sea freight. Even a 2% saving in transport can make a difference when you're dealing with a 25% tariff,” J Krishnan, former president and board of advisors, The Air Cargo Agents Association of India (ACAAI), told The Core.

That’s because many Indian exports to the US — like garments, auto components, or home decor — aren’t luxury items. Their value doesn’t justify expensive shipping.

“Air cargo makes sense when time is critical or when goods are high-value. But for most Indian products, the cost of freight is a big deal. So when margins shrink, sea becomes the smarter option,” Krishnan added.

Although it’s early to predict the full impact, delivery timelines are already stretching as exporters shift from air to slower sea freight to cut costs. This could disrupt inventory cycles in the US, with some sectors facing temporary stockpiles now and potential shortages or delays in the coming weeks.

The Domino Effect on Air Cargo

But what happens to the air cargo industry when businesses make that switch?

According to Ruby Abidi, director of air cargo at logistics provider cargo-partner, there’s a predictable pattern.

“When demand drops, planes start flying half empty,” she said. “At first, airlines with deeper pockets don’t cut prices right away. They wait it out. But smaller, low-cost cargo airlines usually drop their rates quickly to attract customers.”

Eventually, airlines respond by cutting capacity. “If an airline were running four flights a week, it might reduce it to two. That creates an artificial shortage of space. Rates might not come down even if there’s less cargo and eventually customers do not ask for lower prices,” Abidi added.

India's Exports to the United States were $79.44 billion during 2024, according to the United Nations COMTRADE database on international trade.

Freighter operations could eventually feel the heat, but not immediately. Exporters want to move ready inventory — especially high-value goods like electronics, textiles, and precision parts — before tariffs kicked in. This led to a temporary spike in freighter demand, especially for scheduled and chartered air freight to the US.

But how will this affect the air cargo operators?

• Airlines may reduce freighter frequencies or switch capacity to other regions like Europe or the Middle East if the India-U.S. sector softens.
• Since many widebody passenger flights rely on belly cargo revenue, especially from India to the US, a drop in freight demand could impact overall route profitability.
• The charter rush seen in July-early August will likely taper off, making the market softer and less profitable for non-scheduled operators.

Industry experts observed a rush in exports for the orders that are ready before August 7, but also believe that in the next couple of weeks, there won’t be a significant impact on cargo freighters.

“As far as auto and auto components go, the orders that have already been dispatched shouldn’t face any issues. But it’s too early to say how new orders will be affected — or what impact this might have on overall car prices,” Mehta said.

Most of the tariff-hit goods — like auto components, heavy machinery parts, and industrial equipment — aren’t items you can just pack up and airlift overnight. They require long production cycles, careful packaging, and often move by sea rather than air.

“These products have a defined manufacturing cycle. It’s not like you can manufacture them in 12 hours and ship them out. If a factory is currently producing something else, it can’t instantly switch to these tariff-hit goods. Until the production line is adjusted, there won’t be a surge or drop in freighter demand,” Mehta said.

Race To The Deadline

Some Indian exporters, sensing a shift in delivery timelines, are already trying to beat the deadline.

“We had clients who rushed their shipments so they could reach before August 7. Those using air cargo managed to do it. But sea shipments take weeks, so they’re likely to get hit with the new tariff regardless of when they left,” Chaitaly Mehta, director at EKF Logistics told The Core.

Still, she admits it’s too early to know how deep the impact will be.

“It really depends on where companies stand with their orders. Some might ride it out. Others will see a dip in US demand. We’ll know better in a few weeks,” Mehta added.

Will the American Buyer Pay?

But tariffs are only part of the equation. Whether this move delivers a knockout blow — or just a bruise — depends on US buyers and their appetite for Indian goods at higher prices.

Usually, when tariffs are imposed, sellers have two options: absorb the extra cost themselves or pass it on to customers. In many cases, it’s the buyer in the US who ends up paying more.

“Even with a 25% duty, some customers in the US may still pay up. It depends on who the end users are. Are they targeting affluent buyers on the East Coast? Or price-sensitive customers in the Midwest? If your customer can absorb the price, you might still survive. If not, you’re in trouble,” Mehta said.

Which leads to another unknown—how this plays out politically in the US.

“If these tariffs start affecting prices on store shelves, there could be pushback. But it’s too soon to tell,” Krishnan said.