Starting Wednesday, Indian exports to the US are facing significant challenges as the Trump administration enforces 50% tariffs on a variety of goods. This action is anticipated to heavily impact low-margin, labor-intensive industries such as apparel, textiles, gems and jewelry, shrimp, carpets, furniture, and handicrafts, all of which rely heavily on the American market. Trade analysts predict that India’s merchandise exports to the US could decline by as much as 40-45% in the 2025-26 fiscal year compared to the previous year. The Global Trade Research Initiative (GTRI) estimates that exports may drop to approximately $49.6 billion, down from nearly $87 billion in FY25.
Nearly two-thirds of India’s shipments to the US will now be subject to tariffs of up to 50%, rendering them less competitive. Approximately 30% of Indian exports, valued at $27.6 billion, will remain duty-free, primarily including pharmaceuticals, electronics, and petroleum products, while another 4% will incur 25% tariffs, mainly on auto parts. Competitors like Vietnam, Bangladesh, and Cambodia, which benefit from lower tariffs, are expected to seize the market share lost by India. The tariffs consist of a 25% duty announced in July, followed by an additional 25% imposed in August as a penalty for India’s imports of Russian oil and defense items. This situation presents an unprecedented challenge for exporters.
Industries such as home textiles, carpets, and shrimp exports, which depend on the US for up to 60% of their sales, are concerned about significant declines. Industry organizations have warned of potential job losses numbering in the hundreds of thousands. The Gem and Jewellery Export Promotion Council has expressed that the high tariffs could disrupt supply chains and result in billions in trade losses, given that the US represents nearly a third of India’s jewelry exports. Textile exporters have called for immediate government intervention, including financial assistance and loan deferrals, to avert widespread unemployment.
Although the pharmaceutical and electronics sectors are currently exempt, Trump has threatened to impose greater duties on these industries as well unless production is relocated to the US. Economists, including Nobel laureate Paul Krugman, have cautioned that tariffs could contribute to inflation and exacerbate stagflation in the US, but for India, the pressing issue remains the decline in exports and job losses in its most vulnerable sectors.