Donald Trump.
The decision that US President Donald Trump announced to increase the import duty (tariff) on India by 50 percent will come into force from tomorrow (August 27). This can have a profound impact on Indo-US trade relations and many major exporting industries of India can get a big setback.
This additional 25 percent penalty tariff has come in the backdrop of India’s dispute over the claim of its arbitration over India-Pakistan ceasefire during India-Pakistan ceasefire during Operation Sindoor. Prime Minister Narendra Modi made it clear that the ceasefire between India and Pakistan was through mutual negotiation and no third party role was in it. However, Trump has claimed that he got a ceasefire between Indo-Pak.
Strategy to pressurize India?
Critics believe that Trump’s move is only pressure politics. The US wants India to reduce the fees on American products and open its market for American companies.
What a big effect?
According to the latest report by Global Trade Research Initiative (GTRI), the move will directly affect India’s export of $ 60.2 billion to the US.
• Total exports to America from India: $ 86.5 billion (FY 2025)
• Estimated fall: $ 49.6 billion (FY 2026)
• That means loss of $ 36.9 billion (₹ 3.23 lakh crore) in just one year.
According to GTRI
• 30% export ($ 27.6 billion) will not be taxed.
• 4% export ($ 3.4 billion) ie auto parts will be taxed at 25%.
• 66% export ($ 60.2 billion) i.e. 50% tax on clothes, gems, jewelery, shrimp, carpet and furniture will be levied.
Exports in these areas are expected to fall by 70%. That is, a trade of $ 60.2 billion can be reduced to only 18.6 billion dollars.
Effect on employment and supply chain
If India’s exports fall at this level, then the jobs of millions of people can be affected. Also, India’s role may be weak in the global supply chain. Countries like China, Vietnam, Mexico, Turkey, Pakistan, Nepal, Guatemala and Kenya can replace India in the American markets. Experts believe that even if tax is reduced in future, but once these countries create a strong position, it will be difficult for India to get the market again.
Strengths of india
Nevertheless, economists believe that this crisis will not shake the entire economy of India.
• India’s strong macroeconomic stability.
• Consumption-based economy.
• Ongoing changes like GST improvement.
• And various trade partnerships with the UK, the European Union, Russia and ASEAN countries will be helpful in protecting India from the major decline.
50% tariff of Trump is definitely a serious challenge for India. This will have a direct impact on export-based industries and can create a crisis in front of millions of jobs. But India’s internal economy and comprehensive business partnerships can save it from going into deep crisis.
India has forces such as strong foreign exchange reserves, stable banking system, and ever increasing domestic consumption, which gives the ability to bear external shocks. GST and production-based incentive (PLI) schemes, digitization, and major investment in infrastructure have made the domestic market more flexible. Also, India is no longer dependent on America. India’s business relations with Europe, Britain, Russia, Gulf country and ASEAN are becoming stronger. This will help India to reach alternative markets.
Experts believe that in the coming times, India’s growing strength in the Green Energy Sector will make it a permanent and reliable partner in the global supply chain in the Meke in India, Semacist and Electronics Manufacturing, and the Green Energy Sector. This is why India’s internal stability and diverse partnerships can prevent it from going into deep crisis.