Trump's 50% tariffs hit today: What is India's defense plan
What's the story
India is bracing for the impact of US President Donald Trump's 50% tariff on Indian goods, effective today. Trump imposed 25% tariffs on Indian goods from August 7, and later announced an additional 25% levy on India over its crude imports from Russia. The move is likely to hit labor-intensive sectors such as textiles and seafood hard. The Indian government is looking at various measures to mitigate the impact, including an Export Promotion Mission and GST restructuring.
Export challenges
Nearly $48.2 billion worth of exports now subject to duties
In FY25, India exported goods worth $86 billion to the US. However, with the new tariffs in place, nearly $48.2 billion worth of these exports are now subject to a 50% duty. The US Department of Homeland Security confirmed that the duties apply to Indian products entered for consumption or withdrawn from warehouses on or after 12:01am Eastern Daylight Time on August 27.
Sector impact
Labor-intensive sectors likely to be worst affected
Labor-intensive sectors such as textiles and seafood are likely to be the worst affected by the new tariffs. Exports of textiles, shrimp, leather, and gems and jewelry are also expected to take a major hit. Production has already halted in textile and apparel manufacturing units across Tiruppur, Noida, and Surat as manufacturers struggle to compete with cheaper imports from Vietnam and Bangladesh.
Industry woes
Seafood industry staring at major challenges
The seafood industry, especially shrimp farming, is staring at major challenges such as possible inventory losses, supply chain disruptions and farm distress. This is because the US market accounts for nearly 40% of India's seafood exports. Senior-level discussions are underway to assess the situation with no plans for retaliatory measures yet.
Government response
Government takes steps to mitigate impact
The commerce and industry ministry has developed a ₹25,000 crore Export Promotion Mission to protect exporters from the impact of US tariffs. The plan includes trade finance, regulatory measures, standards implementation, market access initiatives and more. Meanwhile, GST restructuring is also being considered as a way to support domestic sectors such as food processing and textiles amid these challenging times.