Higher tariff on Indian rice will burden US consumers, warn experts

The Indian Rice Exporters Federation (IREF) said the latest U.S. tariffs on Indian rice will ultimately hit American consumers, noting that rice is too essential in the household basket for the impact to be absorbed elsewhere.

IREF added that India’s rice exports remain widely diversified and that the country, in coordination with the Government of India, is actively deepening trade partnerships and opening new markets. “While the U.S. is an important destination, evidence from retail markets shows that most of the tariff burden has already been passed on to U.S. consumers,” the Federation noted.

Experts, however, believe President Donald Trump’s threat of an additional 25% tariff is largely political posturing rather than a meaningful policy shift.

The Global Trade Research Initiative (GTRI), an Indian think tank working in the field of trade, said the announcement made on December 8 alongside a new US farm relief package appears to be election-season communication targeted at U.S. farmers.

The think tank stated, "Trump threatens to impose high tariffs on Indian rice. But the threat is politics, not policy." The GTRI noted that even if fresh duties are imposed, the impact on Indian exporters would be limited due to strong demand in other markets. However, higher tariffs would likely make rice costlier for American households that rely on Indian varieties.

Responding to the remarks, the Indian Rice Exporters Federation issued detailed clarifications on Indo-US rice trade dynamics.

"The Indian rice export industry is resilient and globally competitive," said Dev Garg, Vice President, Indian Rice Exporters Federation. "While the U.S. is an important destination, India's rice exports are well-diversified across global markets. The Federation, in close coordination with the Government of India, continues to deepen existing trade partnerships and open new markets for Indian rice."

According to IREF, during the financial year 2024-2025, India exported Basmati rice worth $337.10 million, totalling 274,213.14 metric tonnes (MT), making the US the 4th largest market for Indian basmati. In the same period, India exported non-basmati rice valued at $54.64 million, amounting to 61,341.54 MT, making the US the 24th largest market for non-basmati rice.

The Federation explained that Indian rice in the US is largely consumed by communities belonging to Gulf and South Asian regions. The demand continues to grow, especially for dishes such as biryani, where basmati rice is considered essential and not easily replaceable.

It emphasized that rice grown in the US is not a direct substitute for Indian basmati because of its distinct aroma, flavour, texture, and elongation.
The statement added that before the latest tariff hike, Indian rice already faced a 10 per cent tariff, which increased by 40 percentage points after a 50 per cent tariff was imposed.

Despite this, exports have not seen a major disruption, as most of the cost increase has been passed on to consumers through higher retail prices, while farmers and exporters in India continued to receive stable returns.

The GTRI noted that India should treat the tariff threat as an election-season strategy and avoid offering concessions that could affect its trade position, as such measures could harm US consumers more than Indian exporters.