Trump’s 50% Tariffs on India: Textiles, Jewellery, Shrimps, Leather Industries to be Impacted the Most

United States President Donald Trump on August 6 signed an executive order imposing an additional 25 per cent tariffs on Indian goods. India already faces 25 per cent tariffs after Trump’s August 1 announcement. With both tariffs combined, Indian goods entering the US will now face a total tariff of 50 per cent. According to Trump, the additional tariffs are in response to India’s continued buying of oil from Russia.

While the initial 25 per cent tariff will take effect from today, the additional 25 per cent tariff will take effect after 21 days, giving time for negotiations.  The recently announced tariffs are separate from, and will be charged alongside, existing import duties.

India lambasted the Trump administration’s decision, saying the tariffs are “unfair, unjustified, and unreasonable.” The Ministry of External Affairs (MEA) said that oil purchases from Russia are necessary for meeting the country’s energy demands and that Trump is singling out India while other countries like China and Turkey continue to buy Russian oil.

"It is therefore extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest," the MEA said.

According to think tank Global Trade Research Inititative (GTRI) founder Ajay Srivastava, as reported by PTI, the tariffs are expected to make Indian goods far expensive in the US, potentially cutting exports to America by 40-50 per cent.

India-US Trade Relations

The US continued to be India’s largest trading partner in FY24.

According to India Brand Equity Foundation (IBEF), under the Ministry of Commerce and Industry, the total bilateral trade between the two countries stood at $118.2 billion. Out of this, India exported goods worth $77.5 billion to the US, while imports from the US were $40.7 billion.

IBEF data shows that India’s top exports to the US in FY24 included engineering goods worth $17.6 billion, electronic goods worth $10 billion, and gems and jewellery amounting to $ 9.90 billion. Exports of drug formulations and biologicals stood at $8.72 billion. Petroleum products accounted for $5.83 billion, while readymade garments were exported worth $4.71 billion.

On the other side, India’s imports from the US included mineral fuels and oils worth $12.9 billion, pearls and precious and semi-precious stones worth $5.16 billion, nuclear reactors, boilers and machinery amounting to $3.75 billion, and electrical machinery at $2.38 billion.

Trump’s 50% Tariffs: Sectors to be Impacted the Most

According to an analysis by the think tank GTRI, as reported by PTI, Organic chemicals will now face a 54 per cent duty. Woven apparel will be levied 63.9 per cent import duty, carpets will be taxed at 52.9 per cent, knitted apparel at 63.9 per cent, and textile made-ups at 59 per cent.

Furniture, bedding, and mattresses will attract a 52.3 per cent import duty, machinery and mechanical appliances 51.3 per cent, and diamonds and gold products at 52.1 per cent.

According to GTRI, the sectors that are expected to be heavily impacted by the 50 per cent US tariff include textiles and clothing, with exports worth $10.3 billion, followed by gems and jewellery ($12 billion). Other sectors likely to face significant pressure include shrimp exports ($2.24 billion), leather and footwear at ($1.18 billion), chemicals ($2.34 billion), and electrical and mechanical machinery ($9 billion).

Vipul Bhowar, Senior Director - Listed Investments, Waterfield Advisors, said, "Given that numerous Indian competitors have obtained more favourable tariff rates, the lack of a trade agreement or delays in establishing one could prompt calls for targeted government assistance for the affected industries."