Starting today, Indian exporters will face one of the harshest trade actions in recent memory. The United States has decided to impose a 50% tariff on a wide range of Indian goods, doubling the existing 25% duty.
The move is being justified as retaliation against India’s continued purchases of Russian crude oil and military equipment, despite repeated US warnings.
Two-Thirds Of Exports Hit
According to the Global Trade Research Initiative (GTRI), nearly two-thirds of India’s exports to the US, worth close to $60 billion, will be caught in this new tariff net.
These exports will become significantly more expensive in American markets, eroding competitiveness against rivals like China, Vietnam, Mexico, and Turkey.
Sectors At High Risk
The most vulnerable industries are labour-intensive sectors, including:
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Textiles
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Gems & Jewellery
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Carpets
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Shrimp
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Furniture
Small and medium-sized businesses in these industries face severe financial strain, with job losses looming.
Bhadresh Dodhia, a textile exporter, warned:
“To absorb such a heavy increase in tariff is impossible. Importers won’t accept it, and consumers will ultimately bear the burden. For now, we can only hope the additional 25% tariff goes away.”
India’s Dilemma: Russian Oil vs Trade Access
Former ICAI President Ved Jain explained India’s difficult position:
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Stopping Russian oil would hurt India’s economy by making energy imports costlier.
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Continuing Russian oil purchases risks harsh US trade penalties.
“It’s a choice between two evils,” Jain said, highlighting the policy dilemma.
Economic Consequences For The US
Analysts warn that the tariff war won’t just hurt India. The US could also face:
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Rising inflation from higher import prices
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Slower growth, similar to the 1.4% annual GDP growth during Trump’s 2017–2020 tenure
Economist SP Sharma cautioned:
“This move will not benefit the US. Inflation will rise above tolerable limits, and economic growth could weaken again.”
Projected Export Decline
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Current Indian exports to the US: $86.5 billion
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Projected exports after tariffs: $49.6 billion by FY26
Breakdown of India’s exports post-tariffs:
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30% duty-free
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4% under 25% duty
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66% under 50% duty (approx. $60.2 billion worth)
Global Winners
With India squeezed out, competitors like China, Vietnam, Mexico, and Turkey are expected to gain US market share.
Since the US accounts for 18% of India’s total goods exports, the fallout will create deep economic disruption in key industries.
