 "Textiles, gems, seafood: Sectors that will be hardest hit by Trump's 50% tariffs from tomorrow")
US President Donald Trump’s 50 per cent tariffs on India are set to go into effect tomorrow (August 27).
Trump had levied a 25 per cent tariff on India plus an additional 25 per cent as punishment for buying crude oil from Russia – one of the highest rates on any of the US’ trading partners .
The US Department of Homeland Security announced in its draft order that higher duties will be imposed on Indian goods that are “entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 am eastern daylight time on August 27, 2025”.
New Delhi has decried the move as ‘unjust, unreasonable, and unfair’, while the Kremlin said nations deserve to choose their own trading partners.
The development came in the backdrop of talks over the Free Trade Agreement between India and America having stalled – much to the frustration of Trump and other top US officials.
Trump previously branded India a ‘tariff king’ – a notion both Delhi and the data dispute.
The Prime Minister’s Office has convened a meeting today to review the potential impact of the tariffs. It will be chaired by the principal secretary to the Prime Minister.
But which sectors in India will be hardest by Trump’s tariffs?
Let’s take a closer look
Textiles
Textiles (barring readymade garments) comprise around 26 per cent of India’s total exports. Washington is New Delhi’s largest market for textile and apparel exports. India exports textiles and apparel worth $10.3 billion (Rs 85,500 crore) to the US every year.
Textiles could be one of the worst-impacted sectors.
The Confederation of Indian Textile Industry (CITI) said that it is “deeply concerned” about the potential adverse impact of the effective 50 per cent US tariff rate for India.
“The US tariff announcement of August 6 is a huge setback for India’s textile and apparel exporters as it has further complicated the challenging situation we were already grappling with and will significantly weaken our ability to compete effectively vis-à-vis many other countries for a larger share of the US market,” it said.
The Indian textile industry wants New Delhi to offer to do away with the 11 per cent duty on raw cotton imports in exchange for lowering or removing the 50 per cent rate.
Already there are reports that US businesses have turned to India’s competitors such as Bangladesh and Vietnam to meet their textile and apparel needs.
Gems and jewellery
India last year sent gems and jewellery worth $9.2 billion (76,360 crore) to the United States. The United States comprises nearly 33 per cent of India’s total gems exports. Gems, like textiles, is another labour intensive sector that employs millions across India.Experts say the polished diamond segment, which are already under pressure from lab grown diamonds. may hit even harder.
Adil Kotwal of Creation Jewellery, who sells 90 per cent of his diamond-studded jewels to the US, told BBC his margins are razor thin Even an additional tariff of 10 per cent makes it unfeasible to send diamonds to the United States. “Who can absorb these tariffs? Even US retailers will not be able to [do so],” Kotwal wondered.
Shipments to the United States have already been halted, which has resulted in job losses across the industry. “This place used to be buzzing,” a worker at the diamond-cutting and polishing hub of Surat in Gujarat told the outlet. “Many people were fired recently. We don’t know what will happen to us”.
Seafood
India sends the United States seafood worth Rs 60,000 crore every year – mostly shrimp (Rs 20,000 crore).
Total tariffs on Indian shrimp now stand at 60 per cent. The tariff could see seafood exports reduced to Rs 24,000 crore.
Yogesh Gupta, MD of Kolkata-based seafood exporter Megaa Moda, said that now India’s shrimp will become expensive in the US market.
“We are already facing huge competition from Ecuador as it has only 15 per cent tariff. Indian shrimp already attracts a 2.49 per cent anti-dumping duty and a 5.77 per cent countervailing duty. After this 25 per cent, the duty will be 33.26 per cent from August 7,” Gupta said.
Experts say half a million shrimp workers could be affected directly in India, while two-and-a-half million more could be impacted indirectly.
Steel and chemicals
India in 2024 exported $488.28 million worth of iron and steel products to the US.
India sends the US 100,000 metric tonnes of steel – just a fraction of its yearly steel output of 145 million metric tons – every year.
India sends chemicals worth $2.34 billion (Rs 19,500 crore) the United States every year.
Washington has imposed an additional duty of 54 per cent on organic chemicals.
Auto parts
Washington accounts for just 3.5 percent of New Delhi’s auto part exports. However, India sends auto parts worth Rs 61,000 crore to the to the US every year.
The tariffs will massively impact those sending gearbox and transmission parts to the United States. This comprises 25 per cent of India’s auto part exports. India has a 40 per cent market share of gearbox and transmission parts in the United States.
Pharma
India sends nearly 35 per cent of its pharmaceuticals exports to the United States. Many US companies rely on generic medicine manufactured by Indian firms. Pharma products for now have been excluded from the tariffs. However, the industry remains worried that this could change at any moment.
Why this matters and what experts think?
It matters because the United States is India’s main export market. Nearly 20 per cent of India’s shipments head to the United States. India meanwhile has to compete for market share with countries such as Bangladesh and Vietnam.
The Global Trade Research Initiative (GTRI) thinks US tariffs will impact Indian exports worth $60.2 billion (Rs 5 lakh crore). It estimates that India’s consignments to the US could witness a drop of as much as 40 to 50 per cent. GTRI says exports in labour heavy areas such as textiles, gems and jewellery and seafood could shrink by as much as 70 per cent.
Crisil in a note said, “The imposition of higher tariffs by the US will significantly impact micro, small and medium enterprises (MSMEs), which account for as much as 45 per cent of India’s total exports.”
“Of the five sectors expected to see meaningful impact, gems and jewellery has the highest exposure to the US at $10 billion. While we expect export volumes to contract, the impact may not be fully reflected in revenue terms because of a likely runup in gold prices and sustained domestic demand,” it added.
However, they say the tariffs will not have a dramatic impact on the Indian economy as a whole. Despite the tariff hike, Fitch predicts India’s GDP will grow at 6.5 percent in FY-26.
It remains to be seen if India can persuade the US to work things out at the diplomatic table. If not, New Delhi will have to Take a good long look at Washington as a reliable trade partner. It might also have to deepen the relationship with Russia and have a further rapprochement with China. Meanwhile, India’s businesses will have look to different markets and increase their self-reliance.
With inputs from agencies
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