Tea businesses in the US and India fret over 50% tariffs and wonder if the next few months will bring relief or strife.

As of August 27, the US is doubling its tariffs on goods from India from 25% to 50%, due to the country’s procurement of Russian oil. Indian and US tea businesses worry about the detrimental effects that such tariffs could have on trade between the two nations, as America is a key market for Indian tea. However, recent US appeals court rulings and executive orders from the Trump administration have made it unclear how long tariffs on essential goods, such as coffee and tea, will remain in effect.

Large Volumes and High Values

The Indian Tea Association (ITA) recently expressed concerns over the new 50% tariffs, stating that the US is the fourth largest importer of Indian tea by volume, importing 17 million kilos of tea from India in 2024, with another 6.26 million kilos shipped before May of this year. When it comes to higher-end teas, the US is the second-largest importer by value, spending $87.77 million on Indian tea in the 2024-25 fiscal year.

“The recent imposition of a 50% tariff on Indian goods is likely to impact Indian tea exports to the US. Any increase in cost cannot be absorbed by the supply chain, given that the producers are already operating on very thin margins,” declared a spokesperson from ITA in a statement released in early September.

US Tea Businesses Face Difficult Decisions

Demand for Indian tea in the US is growing, forcing tea business owners to make difficult decisions. “India is our second-largest source of tea,” says Michael Harney, vice president of Harney & Sons. “Teas from Assam and the Nilgiris are very popular. So the 50% tariff is a big question that we’re trying to answer.”

Anjali Bhargava, founder of Anjali’s Cup, recently expressed her concerns over the new tariffs to Lori Ann LaRocco in a report for CNBC. “The president frames this as punishing India, but it will primarily harm American small businesses, companies, and their employees, as well as American consumers,” said Bhargava. “This tariff forces a choice between maintaining quality and staying in business, and many small businesses won’t survive that choice.”

Unlike larger companies that can afford to temporarily absorb higher costs, small and medium-sized businesses must make difficult decisions immediately in order to survive. Short-term measures such as downsizing packaging, reducing product variety, or choosing lower-quality ingredients may help balance rising costs but could hurt consumer loyalty.

Tariffs disrupt long-established supply chain routes, creating ripple effects that spread throughout the entire US tea industry. “Africa has some similar teas at lower tariff rates,” adds Harney, “so we are thinking about that. The future is unclear. However, people love tea, and India produces some of the finest teas.”

Diplomacy Instead of Retaliation

Rather than implementing retaliatory tariffs, India is currently focusing on strengthening diplomatic ties with other nations and diversifying export markets. Once again, China stands to benefit from the Trump administration's trade war as India seeks to increase tea exports there.

In July, India signed a comprehensive trade agreement with the United Kingdom, and negotiations for a free trade agreement with the European Union are at an advanced stage. Meanwhile, talks with the US have come to a standstill.

Rulings and Executive Orders Signal Uncertainty

On August 29, the US court of appeals ruled that most of the tariffs imposed by President Trump are illegal but will remain in place until October 14, giving the Trump administration time to file an appeal with the US Supreme Court.

Then, on September 8, President Trump enacted an executive order exempting goods that cannot be sufficiently produced or supplied by the US from tariffs. Coffee and tea are now technically on that list; however, exemptions may only apply to countries that already have established trade agreements with the US and are recognized as “aligned partners.” It is unclear whether coffee or tea from major suppliers like Brazil and India — still in negotiations with Washington — will be charged 50% tariffs or not.

Such uncertainty and confusion erode consumer confidence and loyalty, stalling demand in a tea market that, up until now, has been experiencing steady gains, especially in the health and wellness segments.