India’s Key Sectors Face Severe Losses Due to Trump’s High Tariffs

US President Donald Trump’s imposition of a 50% tariff on Indian goods is expected to severely impact several key export sectors, including leather, chemicals, footwear, gems and jewelry, textiles, and shrimp, according to industry experts and entrepreneurs.

On Wednesday, Trump imposed an additional 25% tariff on Indian products as a punitive measure for India’s continued purchase of oil from Russia, bringing the total tariff to 50%. Notably, this penalty has been applied only to India and not to other Russian oil buyers like China and Turkey.

According to the India-based think tank GTRI, the tariff hike will significantly increase the cost of Indian goods in the US, potentially reducing exports to the US by 40–50%. The new tariffs will impose additional duties on organic chemicals (54%), carpets (52.9%), woven apparel (63.9%), textiles and ready-made garments (59%), diamonds, gold, and products (52.1%), machinery (51.3%), and furniture, bedding, and mattresses (52.3%). The 25% tariff announced on July 31 will take effect from August 7 (9:30 AM Indian time), with an additional 25% tariff to be implemented by the US from August 27. These are in addition to the existing standard US import tariffs. In 2024–25, bilateral trade between India and the US stood at $131.8 billion ($86.5 billion in exports and $45.3 billion in imports). The sectors most affected by the 50% tariff include textiles/apparel ($10.3 billion), gems and jewelry ($12 billion), shrimp ($2.24 billion), leather and footwear ($1.18 billion), chemicals ($2.34 billion), and electrical and mechanical machinery ($9 billion). Yogesh Gupta, Managing Director of Kolkata-based seafood exporter Mega Modar, stated that Indian shrimp will become significantly more expensive in the US market. “We are already facing stiff competition from Ecuador, which has only a 15% tariff. Indian shrimp already faces a 2.49% anti-dumping duty and a 5.77% countervailing duty. With the additional 25% tariff from August 7, the total duty will reach 33.26%,” he said. The Confederation of Indian Textile Industry (CITI) expressed “deep concern” over the potential adverse impact of the 50% US tariff rate, noting that the US is India’s largest market for textile and apparel exports. The August 6 tariff announcement is a major blow to Indian exporters, further complicating existing challenges and significantly weakening their ability to compete with other countries in the US market. CITI urged urgent measures to support the apparel sector during this difficult time. Colin Shah, Managing Director of Kama Jewelry, described the move as a severe setback for Indian exports, with around 55% of India’s exports to the US directly affected. He noted that the 50% reciprocal tariff imposes a significant cost burden, putting Indian exporters at a 30–35% competitive disadvantage compared to countries with lower tariffs. Shah added that many export orders have already been put on hold as buyers reassess sourcing decisions due to higher landing costs. For MSME-led sectors, absorbing this sudden cost increase is unsustainable, given already thin margins, potentially leading to the loss of long-term clients. Yadavendra Singh Sachan, Managing Director of Kanpur-based Gromor International Limited, suggested that exporters should seek new markets to maintain export growth. Exporters are hopeful that the early finalization of an India-US bilateral trade agreement will help address the tariff challenges. Negotiations for an interim trade agreement between India and the US are ongoing, though sources indicate no concessions will be made on tariffs for agricultural products, dairy, or genetically modified (GM) products. The two countries are working toward concluding the first phase of a bilateral trade agreement (BTA) by this fall (October–November).