Indian exporters of low-margin products such as tea and rice may face fresh challenges after US President Donald Trump announced a 25% tariff on countries doing business with Iran. The decision comes at a time when Indian exporters are already struggling due to existing US tariffs of up to 50%, which have affected investments and labour-intensive sectors. In short, US Tariffs on Iran Trade May Hurt Indian Tea and Rice Exporters
The new tariff announcement has raised concerns among exporters, especially those dependent on traditional markets like Iran.
Trump Announces Immediate 25% Tariff
On Tuesday, President Trump made the announcement through a post on TruthSocial. He said that any country continuing business with Iran would face a 25% tariff on all trade with the United States.
“Effective immediately, any country doing business with the Islamic Republic of Iran will pay a tariff of 25 per cent on any and all business being done with the United States of America,” Trump wrote. He also described the order as “final and conclusive.”
US Tariffs on Iran Trade May Hurt Indian Tea and Rice Exporters, this move links trade penalties directly to Iran’s internal political situation, where large-scale protests have turned violent.
India–Iran Trade Has Already Fallen Sharply
Official data shows that India–Iran bilateral trade stood at around $1.6 billion in FY25, which is much lower than pre-COVID levels. Before the pandemic, total trade between the two countries was close to $15 billion.
The sharp decline happened mainly because India stopped importing crude oil from Iran. In FY19, Indian imports of Iranian crude alone were worth $12 billion, while Indian exports to Iran were close to $4 billion.
Impact of US Sanctions on Trade
Trade between India and Iran has faced restrictions for over a decade. In 2011, Iran was removed from the SWIFT banking system, making international payments difficult. Despite this, India and Iran continued limited trade using a Vostro account mechanism.
However, in 2019, the US Office of Foreign Assets Control (OFAC) imposed product-specific sanctions, which further reduced trade volumes. Since then, Indian exporters have found it increasingly difficult to do business with Iran.
US Tariffs on Iran Trade May Hurt Indian Tea and Rice Exporters. The new 25% tariff could discourage even the remaining trade links.
Tea Exporters Face Fresh Pressure
Indian tea exporters are particularly worried. Iran has traditionally been a strong buyer of Indian orthodox tea, especially from Assam and Darjeeling.
Exporters say the new US tariff may add to existing problems. Indian tea exports have already suffered due to trade restrictions and payment issues in markets like Pakistan and Russia, which were once major buyers.
With limited alternative markets offering good prices, exporters fear further pressure on margins and demand.
Rice and Other Low-Margin Exports at Risk
Apart from tea, rice exporters may also feel the impact. Rice trade usually operates on thin profit margins, and any additional tariff burden can make Indian products less competitive globally.
If exporters have to choose between the US and Iran markets, many may be forced to reduce or stop shipments to Iran to avoid US penalties.
Iran Protests Trigger Global Reaction
The tariff announcement comes amid deadly anti-government protests in Iran. According to the Human Rights Activist News Agency (HRANA), at least 544 people have been killed in the last 15 days, including eight children.
The protests began on December 28, after Iran’s currency, the rial, collapsed sharply. Rising prices and high living costs triggered nationwide demonstrations, which later turned into open protests against Iran’s clerical leadership.
President Trump had earlier warned that the US could take action if Iranian forces continued to use violence against protesters.
Conclusion
The new US tariff announcement adds uncertainty for Indian exporters already facing global trade challenges. Sectors like tea and rice, which depend on stable markets and thin margins, may suffer the most. With India–Iran trade already at historic lows, exporters now face difficult choices in an increasingly complex global trade environment.
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