US Tariffs to Hit Indian Exports Hard from August 27

NEW DELHI:

Indian exporters are bracing for a significant blow as the United States has imposed a steep 50% tariff on a wide range of goods exported from India. This follows President Donald Trump’s announcement on Tuesday that an additional 25% duty will be levied on top of existing charges, with effect from August 27.

The move, according to the US administration, is a penalty against India’s continued purchase of Russian oil. It places India in a group of just three countries, alongside China and Turkey, facing such punitive action.

Several key Indian industries, including textiles, leather, chemicals, footwear, gems and jewellery, and seafood, are expected to bear the brunt of the tariff hike. Industry analysts predict a potential 40 to 50 percent drop in exports to the US, one of India’s largest trading partners.

“We are already facing huge competition from Ecuador, where shrimp attracts only 15% tariff,” said Yogesh Gupta, Managing Director of Megaa Moda, a seafood exporter based in Kolkata. “Indian shrimp already faces 2.49% anti-dumping duty and 5.77% countervailing duty. The new 25% will take it to 33.26% from August 7, making our products far more expensive for American buyers.”

Textiles, one of India’s largest export sectors, is also under severe threat. The Confederation of Indian Textile Industry expressed deep concern, stating that the hike would seriously undermine India’s competitiveness in the US market. “This is a huge setback for India’s textile and apparel exporters. It will significantly weaken our ability to compete with countries facing lower tariff barriers,” the association said.

GTRI, a trade research think tank, estimates that certain categories will be especially hard hit. These include knitted apparel (63.9%), woven apparel (60.3%), made-up textiles (59%), organic chemicals (54%), carpets (52.9%), gems and jewellery (52.1%), machinery (51.3%) and furniture (52.3%).

Colin Shah, Managing Director of Kama Jewelry, warned that the increased duties are forcing buyers to reconsider their sourcing strategies. “Many export orders have already been put on hold. For MSME led sectors, absorbing this cost escalation is not viable. Margins are already thin, and this could force exporters to lose long-standing clients,” he said.

The trade imbalance between India and the US is significant, with bilateral trade in 2024-25 standing at $131.8 billion. Indian exports amounted to $86.5 billion, while imports from the US stood at $45.3 billion.

The sectors expected to suffer the most are textiles and clothing ($10.3 billion), gems and jewellery ($12 billion), shrimp ($2.24 billion), leather and footwear ($1.18 billion), chemicals ($2.34 billion), and machinery and electrical equipment (nearly $9 billion).

With the new tariffs coming into effect within weeks, Indian exporters face an uphill battle to remain competitive in a rapidly tightening global market.