WITH THE US deciding to implement the steep 50 per cent tariffs on merchandise from India beginning Wednesday, exports of low-margin and labour-intensive items starting from attire, textiles, gems and jewelry to shrimps, carpets and furnishings, are set to change into unviable within the American market, jeopardising low-skilled jobs in India.
With Trump’s new tariffs kicking in, commerce consultants estimate that the worth of India’s merchandise exports to the US may drop by as a lot as 40-45% in 2025-26 in contrast with the earlier yr. Assume-tank International Commerce Analysis Initiative (GTRI) estimates product exports to the US may fall to $49.6 billion this yr from almost $87 billion in 2024-25, as two-thirds of exports by worth to the US shall be hit by 50 per cent tariffs, taking efficient tariff charges to over 60 per cent in just a few product classes.
Round 30 per cent of exports to the US — valued at $27.6 billion in FY25 — will stay obligation free as product classes like prescription drugs, electronics, and petroleum merchandise have been exempt from Trump’s tariffs, whereas 4 per cent of the exports — primarily auto components — will face a 25 per cent tariff charge.
In the meantime, rivals like Vietnam, Bangladesh, Cambodia, and even China and Pakistan, which at the moment face decrease tariffs from the Donald Trump administration, are set to learn from India’s potential losses in numerous export-oriented sectors.
The 50 per cent tariff imposed on the vast majority of Indian items exported to the US contains the 25 per cent tariff charge introduced by Trump late July, and an extra 25 per cent tariff introduced early August as a “penalty” for New Delhi’s purchases of Russian oil, aside from its defence imports from Moscow. The extra 25 per cent tariff will take impact from Wednesday.
The sky-high tariffs imply that items exporters can be rendered uncompetitive within the US market, which is among the many handful of commerce companions with whom India has a web items commerce surplus. India runs a pointy commerce deficit with China, Russia and the UAE, its different prime buying and selling companions within the items class.
US demand and sectoral influence
The influence of the tariffs might be broad-based, because the US accounts for 20 per cent of merchandise exports from India and a pair of per cent of the GDP. Sensing a deeper problem for semi-skilled employees, the textile and gems and jewelry sectors have sought COVID-19-era help for the trade to forestall job losses, as almost 30 per cent of exports from these sectors go to the US market.
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Product classes prone to be hit the toughest by excessive US tariffs embody textiles and attire, gems and jewelry, shrimps, equipment and mechanical home equipment, some metals (metal, aluminium, copper), natural chemical substances, agriculture and processed meals, leather-based and footwear, handicrafts, furnishings, and carpets.
Commerce consultants mentioned that the diamond-polishing, shrimp and residential textiles sectors might even see gross sales quantity decline on account of their excessive reliance on US commerce. The US accounts for 48 per cent of income for shrimp exporters, which implies that the marine exports sector would additionally see a pointy decline in volumes.
Furthermore, residence textiles and carpets are each important export-oriented sectors, with exports accounting for 70–75 per cent and 65–70 per cent of complete gross sales respectively. Of this, the US accounts for 60 per cent of exports for residence textiles and 50 per cent for carpets, in keeping with a Crisil estimate.
Crisil Scores, earlier this month, mentioned there would even be a second-order influence on the earnings of sectors equivalent to diamond sprucing, shrimp, residence textiles and carpets, which is able to bear the brunt of US tariffs on account of a “structural shift in demand within the US, with decreased discretionary spending pushed by expectations of rising inflation”.
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American economist Paul Krugman, winner of the 2008 Nobel Prize in Economics, mentioned in a publish on Substack on August 8 that key US knowledge are trying more and more ‘stagflationary.’ There may be virtually full consensus amongst economists that tariffs are inflationary, and that the one dissenters are economists who work, instantly or de facto, for the Trump administration, he mentioned.
Fears of job loss
“Whereas 30% of (India’s US) exports will stay duty-free and 4% will face a 25% tariff, the majority—66% overlaying attire, textiles, gems & jewelry, shrimp, carpets, and furnishings—shall be hit with a 50% tariff, rendering them uncompetitive. Exports from these sectors may plunge 70%, dropping to $18.6 billion, inflicting an total 43% decline in shipments to the US and endangering tons of of hundreds of jobs,” GTRI mentioned in a current report.
Amid fears of misery within the most-affected sectors like attire, textiles, gems and jewelry, shrimp, carpets, and furnishings, exporters have been knocking on the federal government’s door, searching for help as they start to grapple with Trump’s tariff tantrums.
Gems and jewelry exporters, citing their excessive dependence on the US market, have expressed fears of job losses, as steep 50 per cent tariffs would render Indian exports uncompetitive. The Gem and Jewelry Export Promotion Council (GJEPC) mentioned the US tariffs would have far-reaching repercussions throughout the financial system — “disrupting essential provide chains, stalling exports and threatening hundreds of jobs”— provided that the US is the sector’s single largest market, accounting for over $10 billion in exports, almost 30 per cent of the trade’s complete international commerce.
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Exporters have urged the federal government to introduce a focused scheme, equivalent to obligation downside or reimbursement, overlaying roughly 25–50 per cent of the brand new tariffs imposed on gems and jewelry exports to the US from August to December 2025.
The labour-intensive textile trade has additionally appealed for fast money help and a moratorium on mortgage repayments to resist the shock of steep 50 per cent US tariffs that would result in widespread job losses. Throughout a gathering on the Ministry of Textiles earlier this month, the trade additionally sought fast-tracking of free-trade-agreement (FTA) negotiations with the EU, which may cushion towards losses within the US market.
Items exempt from Trump’s tariffs
About 30 per cent of India’s exports, which amounted to $27.6 billion in 2024-25, will stay duty-free within the US market, in keeping with GTRI’s estimates. Main product classes embody prescription drugs, which account for about $12.7 billion price of exports to the US.
Nevertheless, Trump has warned pharmaceutical firms they need to produce inside the US or face tariffs rising to 200 per cent inside two years. A bulk of electronics exports are additionally exempt, but Trump has threatened tariffs on Apple if it continues to export merchandise from India. India’s tariff-exempted electronics exports to the US had been $10.6 billion final yr. These exports included smartphones, switching and routing gear, built-in circuits, unmounted chips, wafers for diodes and solid-state storage units.
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Different exempted objects embody refined petroleum fuels and merchandise ($4.1 billion in 2024-25), in addition to books, brochures, plastics, cellulose ethers, ferromanganese, ferrosilicon manganese, ferrochromium and computing gear equivalent to motherboards and rack servers.
Metals equivalent to unwrought antimony, nickel, zinc, chromium, tungsten, platinum, palladium, gold dore, gold cash, technically-specified pure rubber, coral, echinoderms and cuttlebone are additionally exempt.