In a significant blow to Indian exporters, U.S. President Donald Trump has imposed a new 25% tariff on Indian goods, bringing the total duty on many products to 50%. This measure, a penalty for India’s continued purchase of Russian oil, is expected to severely impact several key sectors of India’s economy.
The first 25% tariff went into effect on August 7, with the additional 25% to be implemented on August 27. These new tariffs are stacked on top of existing import duties, making Indian products far more expensive for American buyers.
According to the think tank GTRI, these tariffs could cut India’s exports to the U.S. by as much as 40-50%. The sectors hit hardest include:
- Apparel and Textiles: Facing duties as high as 63.9%.
- Gems and Jewellery: Now subject to a 52.1% duty.
- Shrimp: Already grappling with anti-dumping and countervailing duties, this sector will see a total duty of 33.26% from August 7.
- Leather and Footwear: Hit with a 50% duty.
Industry leaders are deeply concerned, noting that the tariffs place Indian exporters at a 30-35% competitive disadvantage compared to rivals from other countries. This has already led to some U.S. buyers putting orders on hold, as the sudden cost increase makes sourcing from India unviable for many, especially small and medium-sized enterprises (MSMEs).
While some exporters are now looking for new markets, many are hoping that the ongoing negotiations for a bilateral trade agreement between India and the U.S. will help resolve these challenges. However, progress on the deal has been slow, with India maintaining its stance on not compromising on key sectors like agriculture and dairy.