The announcement of a 25 percent import duty by the United States on a wide range of Indian goods represents a significant inflection point in transcontinental trade relations. The proposed tariff escalation, linked to India’s strategic commercial engagements with Russia, raises critical questions about the direction of global supply chains and the role of air cargo in sustaining high-value trade under geopolitical pressure.
Bilateral trade between India and the United States reached approximately US$87 billion in 2024, with the US holding a goods trade deficit of around US$45.8 billion. The imposition of punitive tariffs introduces systemic uncertainty across logistics networks, particularly for time-sensitive sectors such as pharmaceuticals, precision engineering components, perishables, and semiconductors—all of which rely heavily on air transport for compliance, speed, and value preservation.
Air cargo under scrutiny: Cost pressures and strategic rerouting
The air cargo sector stands at the nexus of this unfolding development. India’s key export sectors—including generics, electronics, garments, and marine products—are vulnerable to sharp demand contraction under higher landed costs. The additional 25 percent tariff introduces margin pressure that may make airfreight unviable for mid- to low-margin shipments, shifting volumes either to deferred modes or rerouting via third-country logistics hubs.
Pharmaceuticals, for instance, account for a major proportion of India’s air-export volumes to North America, with stringent regulatory timelines and cold-chain compliance needs. A cost-induced volume reduction would not only affect export competitiveness but could also strain capacity utilisation on critical sectors such as Mumbai–New York and Hyderabad–Chicago.
Marine products and perishables are equally sensitive. Exporters of fresh seafood, horticulture, and floriculture operate within narrow shelf-life margins, requiring uninterrupted cold-chain visibility and customs efficiency. Any route diversion or additional inspection resulting from tariff recalibration could lead to spoilage risk and revenue loss.
Network realignment and capacity rebalancing
Initial trade flow data for H1 2025 indicates emerging shifts. Air cargo volumes from India to the EU and UK have grown modestly, reflecting increased reliance on secondary markets as tariff tensions simmer. These adjustments are expected to intensify should the US measures be enacted. Freighter operators and integrated express carriers may respond by shifting capacity from US corridors to more stable European and Middle Eastern lanes.
Airlines operating in the India–US sector may be forced to reassess aircraft deployment strategies, especially on routes currently served by widebody belly hold cargo. Repositioning to maximise load factors across triangular or circular routings involving Europe, or leveraging Middle Eastern hubs as consolidation points, may become a more viable operational model.
Exporters at an operational crossroads
India’s principal export sectors to the United States now face varied strategic pressures as the looming 25 percent tariff prompts operational recalibration across supply chains. In the pharmaceutical sector—heavily reliant on air freight due to cold-chain and regulatory compliance demands—exporters may be compelled to renegotiate supply contracts or shift warehousing functions to intermediary jurisdictions to mitigate duty exposure.
The technology and electronics verticals, particularly those anchored in Bengaluru and Chennai, are at risk of losing demand to alternative sourcing destinations such as Vietnam or Malaysia, potentially redrawing origin–destination maps within the global cargo network. For the textile and apparel industry, where operating margins are already constrained, any additional cost burden could suppress demand and accelerate a pivot toward markets offering preferential trade access or tariff-free regimes.
Meanwhile, India’s diamond and precious goods exporters—though benefitting from high value-to-weight ratios—remain vulnerable due to limited elasticity in pricing; even minor tariff increases could undercut the viability of using air freight for these consignments. Collectively, these shifts highlight the urgency for export stakeholders to reassess route economics, contractual flexibility, and mode selection in response to rapidly evolving trade policy risks.
