US Imposes 50% Tariff on Indian Exports Impacting Key Industries

In a major setback for Indian exporters, the United States has imposed a steep 50 per cent tariff on a large portion of goods coming from India. The tariffs came into effect at 9:31 am IST (12:01 EST) on Wednesday, impacting nearly two-thirds of India’s exports to the US, valued at over $60 billion annually. This move doubles the 25 per cent tariff rate that was announced earlier this month.

According to US President Donald Trump, the primary reason for the high tariffs is India’s continued purchase of Russian crude oil and defense hardware. The US Department of Homeland Security stated that the new higher rate applies to all Indian goods that “entered for consumption or withdrawn from warehouse for consumption” on or after the specified date and time.

Scale of India’s Exports to the US

India currently exports around $86.5 billion in goods to the US every year, according to the think tank Global Trade Research Initiative (GTRI). Out of this, approximately $60.2 billion worth of goods will now face the 50 per cent tariff. Government estimates are slightly more conservative, suggesting that exports worth $48.2 billion may be affected.

Economists warn that such a steep increase in tariffs could make exporting to the US commercially unviable. This could result in widespread job losses, slower economic growth, and increased pressure on India’s labor-intensive industries.

Sectors That Will Be Hit the Hardest

According to GTRI, labor-intensive industries such as textiles, gems and jewellery, leather goods, food, and automobiles will be among the worst affected. Ajay Srivastava, founder of GTRI, has warned that exports in these sectors could fall by up to 70 per cent, declining from $60.2 billion to $18.6 billion. Overall shipments to the US could drop by 43 per cent, potentially putting hundreds of thousands of jobs in India’s export hubs at risk.

This tariff hike could also make Indian products less competitive compared to goods from other Asian countries. For instance, China faces a 30 per cent tariff, Vietnam 20 per cent, Indonesia 19 per cent, and Japan 15 per cent. India’s goods now face the steepest trade barrier among major Asian exporters to the US.

Shrimp Exports

India exported $2.4 billion worth of shrimp to the US in FY2025. The US is the largest market for Indian farmed shrimp, particularly peeled, deveined, cooked, and breaded varieties. With tariffs expected to rise to as high as 60 per cent, farm-gate prices in Andhra Pradesh are likely to collapse. Processing hubs in Visakhapatnam and West Godavari face serious threats, while competitors like Ecuador, Vietnam, Indonesia, and Thailand may capture a significant portion of the market.

Shrimp exporters fear that production could decline drastically, affecting thousands of workers in farming, processing, and shipping. The ripple effect could also hit supporting industries such as packaging, logistics, and cold storage.

Gems and Jewellery

India’s gems and jewellery exports to the US stood at $10 billion, representing 40 per cent of India’s total exports in this sector. The tariffs will rise from 2.1 per cent to 52.1 per cent. This steep increase is expected to severely impact employment in Surat, Mumbai, and Jaipur, cities that collectively employ millions in cutting, polishing, and manufacturing jewellery.

Industry insiders have warned that a significant portion of India’s jewellery exports could be redirected to other countries, resulting in factory closures, layoffs, and financial strain on small businesses. Competitors in China, Italy, and Thailand may gain market share as a result.

Textiles and Apparel

India exported $10.8 billion worth of textiles and apparel to the US in FY2025, with apparel alone accounting for $5.4 billion. The US represents 35 per cent of India’s apparel exports. Tariffs will jump from 13.9 per cent to 63.9 per cent, erasing any price advantage Indian manufacturers previously enjoyed.

This surge in tariffs will affect major textile clusters, including Tiruppur, Noida-Gurugram, Bengaluru, Ludhiana, and Jaipur. Bangladesh, Vietnam, Mexico, and countries under the CAFTA-DR trade agreement are expected to replace Indian suppliers, taking advantage of the lower tariffs they face.

The impact is expected to ripple across the entire supply chain, from cotton farmers to garment workers, potentially leading to a substantial rise in unemployment in the textile sector.

Carpet Industry

India’s carpet exports to the US totaled $1.2 billion in FY2025, with Washington accounting for 58.6 per cent of these exports. Tariffs will increase from 2.9 per cent to 52.9 per cent, threatening the livelihoods of artisans in Bhadohi, Mirzapur, and Srinagar.

Turkey, Pakistan, Nepal, and China are likely to gain from the gap left by India. Experts say that thousands of skilled artisans may lose their primary source of income, leading to potential closures of small-scale carpet workshops.

Handicrafts

Indian handicraft exports to the US were valued at $1.6 billion in FY2025, with Washington taking a 40 per cent share. Factory closures are expected in cities such as Jodhpur, Jaipur, Moradabad, and Saharanpur. Competitors like Vietnam, China, Turkey, and Mexico may fill the market gap.

The handicraft sector is highly labor-intensive, and any disruption could have long-term social and economic consequences for artisans who rely on these exports for their livelihood.

Leather and Footwear

India’s leather goods and footwear exports to the US are worth $1.2 billion. With the full 50 per cent tariff now in place, Indian products risk losing ground to Vietnam, China, Indonesia, and Mexico. Major production hubs, including Agra, Kanpur, and Tamil Nadu’s Ambur-Ranipet cluster, may face declining orders, threatening the livelihoods of workers in tanning, manufacturing, and retail.

Agriculture and Processed Food

Indian agricultural exports, including basmati rice, tea, spices, and other processed foods, are valued at $6 billion annually. With the new 50 per cent tariff, countries like Pakistan, Thailand, Vietnam, Kenya, and Sri Lanka could replace Indian suppliers in the US market.

Farmers and exporters fear that demand could sharply decline, leading to reduced production, lower prices, and potential job losses in rural communities. The effect could also impact allied industries such as packaging, transportation, and cold storage logistics.

Products Exempt from Tariffs

Not all Indian exports are affected. Approximately 30.2 per cent of exports, worth $27.6 billion, will continue to enter the US duty-free. This includes pharmaceuticals and active pharmaceutical ingredients (APIs), which account for 56 per cent of exempt exports.

Electronics, including smartphones, switching and routing gear, integrated circuits, unmounted chips, wafers for diodes, and solid-state storage devices, are also exempt. These exemptions provide a limited cushion for India’s export economy but do not offset the severe impact on labor-intensive industries.

Economic Implications

Experts warn that the new tariffs could significantly slow down India’s export growth. Labor-intensive sectors are particularly vulnerable, and reduced competitiveness in the US market may encourage global buyers to switch to alternative suppliers.

The government may need to explore new markets, strengthen trade relations with other countries, and provide relief measures to affected industries. Exporters and policymakers will have to work together to mitigate job losses and ensure long-term stability.

The overall impact could affect not only Indian businesses but also workers, farmers, and artisans who depend heavily on exports to the US. With competitors in Asia and Latin America facing lower tariffs, India risks losing its hard-earned market share in the world’s largest consumer economy.

The 50 per cent US tariff is one of the harshest trade measures imposed on India in recent history. While some sectors such as pharmaceuticals and electronics remain exempt, the majority of Indian exporters—especially in textiles, gems, shrimp, and leather—face a tough future.