The Hindu: Published on 29 August 2025.
Why in News?
The U.S. has imposed 50% tariffs on imports from India effective August 27, 2025.
This sudden hike is expected to severely impact India’s export-driven sectors, particularly those where the U.S. is a major buyer.
The development has already triggered price falls, production cuts, and export slowdowns in labour-intensive industries.
Background:
India and the U.S. share strong trade relations, with the U.S. being one of India’s top export destinations.
Earlier, most Indian exports to the U.S. faced relatively low tariffs (2–13%), but the new duties raise these rates to 50–63% in many cases.
India’s key U.S.-oriented exports include shrimp, textiles, jewellery, carpets, handicrafts, leather, metals, and machinery.
Key Issues:
High Tariffs:
Shrimp tariffs: increased from 10% → 60%.
Jewellery & gems: 2.1% → 52.1%.
Textiles & apparel: 13.9% → 63.9%.
Carpets: 2.9% → 52.9%.
Severe Sectoral Impact:
Shrimp (Andhra Pradesh): 20% fall in farmer purchase prices already.
Textiles (Tiruppur, Noida, Ludhiana, Bengaluru): cancellations, downsizing, shift cuts.
Jewellery (Surat): production cuts, threat to 12 lakh jobs.
Secondary Sectors:
Handicrafts, leather goods, furniture, and basmati rice also face heavy tariffs.
Modest-Impact Sectors:
Organic chemicals, metals (steel, aluminium, copper), and machinery will feel pressure, but less severe since the U.S. is not their dominant market.
Immediate Impact:
Shrimp exporters saw prices fall 20% after the first tariff hike, with further drops expected.
Jewellery hubs like Surat are already reducing operations.
Textile exporters in major hubs have halted expansion plans and are facing working capital stress.
Carpet exports, heavily reliant on the U.S. (58.6% share), are now at high risk.
Likely Short-Term Impact:
Severe job losses in labour-intensive sectors (textiles, jewellery, handicrafts).
Reduced foreign exchange earnings from exports.
Increased stress for MSMEs, especially in clusters dependent on U.S. orders.
Government Response:
Short-Term Relief:
A multi-ministry plan is under preparation to cushion exporters.
RBI has indicated readiness to provide financial support.
Medium to Long Term Strategy:
Promoting the “Vocal for Local / Swadeshi” push.
Diversifying export markets to reduce reliance on the U.S.
Better use of FTAs with other countries for market access.
Impact on India-U.S. Relations:
Tariffs signal trade tensions that could affect broader bilateral ties.
May push India to accelerate partnerships with EU, ASEAN, and African nations as alternative export destinations.
Conclusion:
The U.S. tariff hike is a major shock to India’s export economy, especially in labour-heavy, U.S.-dependent sectors like shrimp, textiles, jewellery, and carpets. While the government is planning short-term relief and long-term diversification, the immediate challenge lies in protecting jobs and stabilizing exports.
