Indian tea prices in US set to rise around Diwali amid tariff hike: Wagh Bakri CEO

AhmadJunaidBlogAugust 16, 2025378 Views


Indian tea lovers in the United States may soon have to pay more for their favorite brew, as additional tariffs on Indian goods are expected to take effect by September–October, just ahead of the festive season. Gujarat-based tea major Wagh Bakri, which exports nearly 10–12% of its annual ₹3,000 crore sales to the US, has warned that prices of Indian tea could rise sharply during the Diwali period.

The warning comes after US President Donald Trump announced a new round of tariffs on Indian imports on August 6, 2025. This follows an earlier 25% duty imposed on August 1, linked to India’s continued purchase of Russian crude oil amid the ongoing Russia–Ukraine conflict. With the latest move, most Indian goods entering the US are now subject to an effective 50% tariff, the highest levied on any American trading partner. The second round of duties will start from August 27.

US tea market

“The US is our number one export market, followed by the Middle East, Europe, and Australia,” Sanjay Singhal, CEO of Wagh Bakri Tea Group, told Hindu Businessline. “India is the world’s largest grower of premium black tea, and the US does not produce tea at all. With a 50% tariff in place, distributors cannot absorb the cost. The burden will ultimately fall on consumers, and prices in the US will definitely rise.”

Currently, three types of Indian tea are shipped to the US — loose tea, private label tea manufactured in India for major US retailers like Walmart, and packaged tea brands such as Wagh Bakri. All three categories are expected to feel the pinch of the tariff.

Adding to the uncertainty is timing. Indian exporters usually ship large consignments ahead of the festive season, especially Diwali in October, when demand spikes in the US. “Many of our containers have already left Indian ports and are at sea. These will land in the US over the next two to three weeks. Since the tariffs were imposed after shipment, we need to see how customs handles consignments that are already en route,” Singhal noted.

Impact on consumers

If tariffs are fully implemented, the average price of packaged Indian tea in the US could see a steep jump. Retailers, who typically offer Indian tea products to South Asian diaspora communities as well as an increasing base of American consumers, may be forced to raise prices by 15–25%.

Despite this, Wagh Bakri expects to sustain 12% growth in the US market, citing the growing popularity of Indian tea beyond just the Indian diaspora. “Our teas are no longer limited to the community market. We now see mainstream American consumers developing a taste for black tea,” Singhal said.

Trade tensions loom

India exported goods worth $87 billion to the US last year. With Washington’s escalating tariffs, exporters across multiple sectors — including textiles, food, and FMCG — fear heavy losses. The recent duties have already strained bilateral ties between the two countries.

However, there may be a glimmer of relief. Speaking on Friday after meeting Russian President Vladimir Putin, President Trump hinted that Washington might hold back on imposing secondary sanctions on countries like India that continue to buy Russian crude oil. “If I did a secondary sanction, it would be devastating. If I have to do it, I’ll do it. Maybe I won’t have to,” he said.

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