The recent decision by the US President Donald Trump to impose steep tariffs on Indian imports has started the dent-act. It has dealt a severe blow to India’s export-driven sectors. In a move aimed at penalising New Delhi’s continued import of Russian oil, the US hiked tariffs on Indian goods to 50%- 25% effective from 7th August, and the additional 25% effective from 27th August onwards. These are far surpassing previous rates and those faced by competitors such as Vietnam and Bangladesh.
Repercussions for Indian Exporters
Indian exporters, particularly in textiles, apparel, gems, jewellery, and auto components, are now caught in a financial squeeze. US importers, including retail giants Walmart, Amazon, Target, and Gap, have responded by suspending or halting orders from Indian suppliers. These companies have communicated to Indian exporters that the new costs, which will raise end-prices by 30–35%, cannot be passed on to US consumers, effectively pausing shipments “until further notice”.
For Indian companies already battling slim margins, such as Welspun Living, Gokaldas Exports, Indo Count, and Trident, the move is catastrophic, these firms derive 40% to 70% of their revenues from US sales. Industry watchers estimate the order suspensions could lead to a loss of $4–5billion in trade, with potential drops in US-bound orders by 40–50%.
Small Businesses and Textile Hubs Hit Hard
The impact is most acute in labor-intensive sectors and among small and medium enterprises (SMEs), particularly in textile hubs like Tiruppur and Surat. Exporters have received urgent requests to halt shipping, and factories serving the US market are now facing the prospect of significant layoffs and production cutbacks. Many fear that competitors in low-tariff countries like Bangladesh and Vietnam will grab the lost US business.
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Broader Economic Impact
The US is India’s largest export destination, accounting for 28% of total textiles and apparel exports, valued at $36.6 billion in 2024–25. Across all sectors, the tariffs threaten nearly $87 billion in annual exports, equivalent to 2.5% of India’s GDP. Analysts warn that the curbs could shave 0.2–0.5% off India’s GDP growth, and even trigger a decline below 6% this year.
Government, Industry Respond
Indian officials have decried the US tariffs as “unfair” and “unjustified,” while Prime Minister Narendra Modi has promised measures to support affected sectors. Industry leaders and policymakers are urging for fiscal relief, alternative market development, and intensified diplomatic negotiation with Washington to prevent long-term damage.
The Road Ahead
With global supply chains in turmoil and American retailers seeking alternatives, India’s export sector faces a moment of reckoning. Unless negotiations prompt a reversal or mitigation, the ongoing order halts and loss of market share—at least in the short term—pose serious challenges for Indian businesses, workers, and economic prospects.
