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Tariffs

India's Export Sector Faces Devastating Blow from Trump's 50% Tariff

Strategic Insights

— 2 min read

Indian exporters warn that thousands of jobs are at stake after US President Donald Trump implemented a 50% tariff on Indian exports, severely impacting low-margin, labor-heavy sectors such as textiles, gems and jewellery, and chemicals. The measure is set to hit a wide range of exports, including textiles, gems and jewellery, shrimp, carpets, leather, furniture, sporting goods, and chemicals. Research groups estimate that nearly two-thirds of Indian exports to the US, valued at about $60 billion, now attract the highest tariff rate of 50%.

Key Takeaways:

  • The 50% tariff on Indian exports, implemented by US President Donald Trump, threatens to gut an export sector worth tens of billions of dollars and destabilise one of the world's largest economies.
  • Indian exporters warn that hundreds of thousands of jobs are at stake, particularly in low-margin, labor-heavy sectors such as textiles, gems and jewellery, and chemicals.
  • The tariff is set to hit a wide range of exports, including textiles, gems and jewellery, shrimp, carpets, leather, furniture, sporting goods, and chemicals.
  • Research groups estimate that nearly two-thirds of Indian exports to the US, valued at about $60 billion, now attract the highest tariff rate of 50%.
  • Global Trade Research Initiative estimates that merchandise exports to the US could fall more than 40% this year, to about $50 billion from $87 billion in 2024.
  • The US is India's largest export market, accounting for nearly 30% of Indian exports, but nearly 70% of India's exports to America, valued at $55 billion, are now under serious threat.
  • Analysts warn that the impact will be felt far beyond the factory floor, affecting employment prospects, consumption demand, and global monetary policy.
  • The US treasury secretary accused India of "profiteering" from Russia's war against Ukraine, prompting India's foreign ministry to accuse the US of applying "double standards" in penalising New Delhi for purchasing Russian crude oil while sparing China.

Statistics:

  • $60 billion: Value of Indian exports to the US that now attract the highest tariff rate of 50%.
  • 40%: Estimated decline in merchandise exports to the US this year.
  • $50 billion: Estimated value of merchandise exports to the US this year.
  • $87 billion: Value of merchandise exports to the US in 2024.
  • 30%: Proportion of Indian exports that remain duty-free.
  • 25%: Tariff rate applied to four percent of Indian exports.
  • 50 per cent: Tariff rate applied to three-quarters of Indian exports to the US.
  • $10 billion: Value of gems and jewellery exports to the US annually.
  • 70%: Proportion of India's exports to America that are now under serious threat.
  • $55 billion: Value of India's exports to America that are now under serious threat.
  • 0.3 percentage points: Potential cut to India's GDP growth forecast due to the tariff.

Sources:

  • NDTV
  • Indian Express
  • Moneycontrol
  • Global Trade Research Initiative
  • Council for Strategic and Defence Research
  • Federation of Indian Export Organisations
  • Gem and Jewellery Export Promotion Council
  • Kotak Mahindra Bank
  • Barclays
  • Emkay Global
  • White Oak Capital
  • Anand Rathi Group

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