President Trump imposed 50% tariffs on most Indian goods entering the US, impacting a $86.5 billion trade relationship. Key sectors like textiles and jewelry face significant export declines, potentially costing India nearly 1% of GDP growth.
Indian goods headed to the United States are now facing a wall of tariffs. President Donald Trump has slapped a 50% import duty on most shipments from India—doubling existing taxes and setting off one of the sharpest trade clashes between Washington and New Delhi in years.
The White House says the move is punishment for India’s continued purchase of discounted Russian oil and defence hardware. But on the ground, economists warn, the impact will be felt in factories, workshops and job markets across India. Some estimate the hit could shave nearly one percentage point off India’s GDP growth this year.
Why This Matters: India’s Biggest Buyer Just Raised the Price
For India, the US isn’t just another trading partner—it’s the largest export destination, worth nearly $86.5 billion annually. Now, almost two-thirds of those shipments will face the new tariff wall.
Essential sectors like pharmaceuticals, electronics and petroleum products have been spared, and metals such as aluminium and steel will continue under a lower 25% rate. But industries that employ millions—textiles, gems and jewellery, seafood, leather goods—are squarely in the firing line.
Trade think-tank GTRI warns exports in those areas could fall by as much as 70%, shrinking from $60.2 billion to $18.6 billion. Overall, India’s shipments to the US could be slashed nearly in half.
“This is an earthquake,” said Kirit Bhansali of the Gems and Jewellery Export Promotion Council.
The Jobs Question
Behind those trade numbers are real people. India’s unemployment rate already stood at 5.6% in June (and higher at 7.1% in cities). If US buyers turn elsewhere, economists fear the fallout will ripple through industries that rely heavily on American demand.
Textiles alone employ more than 45 million Indians. Apparel Export Promotion Council official Mithileshwar Thakur warned that Indian firms now face a 30% cost disadvantage compared with Bangladesh or Vietnam. Even if tariffs are rolled back, he added, rivals may already have locked down US contracts.
Oil at the Center of the Clash
At the heart of the tariff war is energy. India is now the world’s biggest buyer of Russian seaborne crude, sourcing around 40% of its oil from Moscow. That’s a massive leap from less than 1% before the Ukraine war.
The discounts on Russian oil, once a hefty $20–25 per barrel, have shrunk to about $2.50. But for New Delhi, it’s still a better deal than volatile global markets—and a way to secure stable supply.
Indian refiners are estimated to have saved $17 billion since 2022 by buying Russian oil. Yet analysts warn those savings could be dwarfed by the $37 billion in export losses to the US triggered by Trump’s tariffs.
Delhi’s Response: Buying Indian, Selling Elsewhere
Prime Minister Narendra Modi has responded by urging Indians to back homegrown products. At the same time, his government is preparing a mix of policy measures:
- GST reform: lowering most tax brackets to 5% or 18% to make essentials like textiles and food cheaper.
- Relief for exporters: considering a multibillion-dollar support package, along with moratoriums on loan repayments and lower interest rates.
- Diversifying markets: signing new trade deals, including one with the UK, and scouting new partners in Asia and Africa.
In a surprising twist, New Delhi is even weighing a cautious thaw with Beijing. Modi is expected to attend the Shanghai Cooperation Organisation summit in China, his first visit since the 2020 border clash, as part of a broader strategy to counterbalance US pressure.
“Economic Selfishness” Era
Modi summed up the moment starkly this week: “We live in an era of economic selfishness where every country puts its own interests first. No matter how high the pressure, India will continue to build its strength to withstand it. We are ready to pay a heavy price to protect our interests.”
For now, India’s exporters are bracing for tough months ahead. For many workers in Surat’s diamond workshops, Tiruppur’s textile mills, or Kerala’s seafood plants, Trump’s tariff shock is no longer about geopolitics—it’s about whether the next paycheck arrives on time.