Trump tariffs: How the 50% duty wall in US could hit Indian exporters
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From August 27, the US will double duties on Indian goods, threatening $48 billion worth of exports. The United States has issued a draft order imposing an additional 25% tariff on Indian goods starting 12.01 am EDT, August 27, 2025. This comes on top of the 25% tariff already in place since August 7. Together, Indian exports to the US will now face a 50% duty, one of the highest rates among US trading partners.
The move is part of Washington’s penalties on India for continuing to buy Russian crude oil and military equipment. Apart from India, only Brazil faces the same steep duty. India has called the US action “unfair, unjustified and unreasonable”.
Which sectors are hit hardest?
The new tariffs will impact labour-intensive and high-value export sectors, especially:
- Textiles & apparel – $10.8 bn exports from hubs like Tirupur, NCR, Bengaluru
- Gems & jewellery – $10 bn exports, threatening jobs in Surat and Mumbai
- Shrimp – $2.4 bn exports, especially from Visakhapatnam farms
- Carpets & handicrafts – $2.8 bn combined, with Turkey and Vietnam likely to benefit
- Agri-food exports – $6 bn including basmati, spices and tea, where Pakistan and Thailand gain an edge
- Metals & chemicals – Steel, aluminium, copper ($4.7 bn); organic chemicals ($2.7 bn)
- Machinery – $6.7 bn
According to think tank GTRI, 66% of India’s exports to the US ($60.2 bn) will now face the 50% tariff. About 3.8% of exports ($3.4 billion), primarily auto components, will also face a 25% tariff. 30.2% of exports ($27.6 billion) will continue to enter the US market duty-free. Sectors exempt from the duty include pharma, energy products and electronics, PTI reported.
Why exporters are worried
Exporters call the levy “prohibitive”, saying it will drive many Indian goods out of the US market. "The U.S. customers have already stopped new orders," said Pankaj Chadha, president of the Engineering Exports Promotion Council told Reuters. "With these additional tariffs, the exports could come down by 20% to 30% from September onward."The government has promised financial aid such as greater subsidies on bank loans and support for diversification in the event of financial losses, Chadha added. "However, exporters see limited scope for diversifying to other markets or selling in the domestic market."
A commerce ministry official told Reuters the government had identified nearly 50 countries to which India could boost exports, particularly items such as textiles, food processed items, leather goods and marine products.
Key concerns
- Loss of competitiveness – Competing nations face far lower tariffs: Myanmar (40%), Thailand and Cambodia (both 36 %), Bangladesh (35 %), Indonesia (32 %), China and Sri Lanka (both 30 %), Malaysia (25 %), the Philippines and Vietnam (both 20 %).
- Job cuts – Gems, jewellery, textiles, and leather industries warn of layoffs.
- Production slowdown – Some footwear companies say they may halt production until clarity emerges on a bilateral trade agreement.
Exporters have demanded: interest subsidies, faster GST refunds, reforms in SEZ law and long-term export strategy to manage high tariffs.
What’s at stake?
The US is India’s largest trading partner since 2021-22, with bilateral trade in goods worth $131.8 bn in 2024-25 ($86.5 billion exports and $45.3 billion imports). According to the US data, India's exports were $91.2 billion in 2024.
The US tariff hike to 50% could wipe out India’s competitiveness in its largest export market, threatening billions in exports and thousands of jobs. Labour-heavy industries in textiles, jewellery, and seafood are most at risk.