Trump’s 50% tariffs on India take impact: Industry analysts warn of fallout as export hubs brace for ache; trade deal still in limbo— key takeaways

Trump had introduced 50% tariffs on India earlier this month, which went into impact on Wednesday (AI picture)

NEW DELHI: The extra 25 per cent tariff imposed by US President Donald Trump on Indian items over New Delhi’s purchases of Russian oil have come into impact, elevating the general levy on exports to 50 per cent.Trump had first introduced reciprocal tariffs of 25 per cent on India from August 7, alongside comparable levies on about 70 different nations. He later doubled tariffs on Indian items to 50 per cent, citing Russian crude imports, however allowed a 21-day window for negotiations.

Who’ll pay the worth?

Several sectors, together with textiles and apparels, gems and jewelry, seafood (primarily shrimp), and leather-based items, are set to be affected by the newly imposed tariffs. The Indian pharmaceutical business, an important provider of generic medication to the US, together with electronics and smartphones, together with Apple iPhones, have been exempted from the tariffs. While some of the tariff prices could also be absorbed by Indian exporters by way of worth reductions and US importers by incurring greater bills, the tariffs are anticipated to render Indian exports much less aggressive in comparison with exporters from neighbouring nations that face tariffs in the ten–25 % vary. The ensuing decline in orders from the US, India’s largest market for these merchandise, is anticipated to adversely influence a whole lot of MSMEs (micro, small and medium enterprises), resulting in layoffs and elevated unemployment.

Exemptions and transit Clause

Indian merchandise already “loaded on a ship and in transit” to the US earlier than the August 27 deadline might be exempt from the extra 25 per cent responsibility, offered they’re cleared for consumption by September 17, 2025, and importers declare the particular code HTSUS 9903.01.85 to US Customs, DHS mentioned.

FIEO sounds alarm as US tariffs chew

Apex exporters physique Federation of Indian Export Organisations (FIEO) on Tuesday had warned that steep US tariffs have pressured textile and attire producers in Tirupur, Noida, and Surat to halt manufacturing, reported PTI.President S C Ralhan mentioned about $47–48 billion price of India’s exports to the US now face 30–35 per cent price disadvantages, making them uncompetitive in opposition to rivals from Vietnam, Bangladesh and China. Labour-intensive sectors like leather-based, shrimp and handicrafts are additionally in danger.He urged speedy assist by way of cheaper credit score, mortgage moratoriums, and sooner trade offers, whereas stressing pressing diplomatic engagement with Washington.Also learn: Indian refiners unlikely to cease Russia crude oil trade beneath US strain

India stays agency

The authorities has dominated out retaliation however is getting ready measures to cushion exporters from the 50% US tariffs. Senior officers informed ET {that a} Rs 25,000-crore Export Promotion Mission is into consideration, masking trade finance, SEZ reforms, warehousing, ecommerce hubs, and “Brand India” promotion. Commerce minister Piyush Goyal mentioned India will shield home pursuits by way of GST tweaks to spice up demand in sectors like textiles and meals processing, whereas additionally diversifying trade ties with different economies.Earlier, on Monday, Prime Minister Narendra Modi had mentioned he couldn’t compromise on the pursuits of farmers, cattle-rearers, and small-scale industries. “Pressure on us may increase, but we will bear it,” he asserted. India had described the US transfer as “unjustified and unreasonable.”

Experts name it a ‘lose-lose’

Trade consultants warned the escalation dangers damaging each economies. Mark Linscott, Senior Advisor with The Asia Group, was quoted by that “unfortunately”, the US and India have managed to convert what appeared to be a true and unprecedented win-win on trade into a “remarkable lose-lose.”“Hopefully, we will find a way to conclude a satisfactory mutually beneficial Free Trade Agreement with the United States early rather than late and that would certainly take us to the next step of the visit of President Trump to India,” mentioned former overseas secretary and Rajya Sabha MP Harsh Vardhan Shringla.Meanwhile, Raj Manek, Executive Director and Board Member of Messe Frankfurt Asia Holdings Ltd acknowledged India should intensify its focus on innovation and sustainability to attain its $100 billion goal in textiles. He pressured that funding in man-made fibres (MMF) and efficiency materials can be important at this stage. “Over 60 per cent of global fibre consumption is now in MMF. With the PLI scheme targeting MMF apparel and technical textiles, India is well-positioned to build scale and future-ready capacity,” Manek mentioned after the conclusion of the thirteenth version of Gartex Texprocess India, a tradeshow on garment and textile equipment held in the capital, as reported by ET. He added, “At the same time, adopting energy-efficient machinery, managing effluents effectively, and converting waste into value will help meet ESG expectations while lowering costs.”

Indian refiners unlikely to cease Russia crude oil trade

Indian refineries are persevering with their imports of Russian crude regardless of the Trump administration’s 25 per cent extra tariffs, with officers indicating minimal chance of halting purchases. Executives informed ET that September-loading cargoes had been barely decrease because of decreased reductions on Russian oil, however October volumes might rise as costs alter. They pressured that there aren’t any official directions to cease procurement, reflecting the federal government’s clear message of “country first, commerce later.” Officials, together with PM Narendra Modi, External Affairs Minister S Jaishankar, and Commerce Minister Piyush Goyal, have conveyed that India will assist exporters by way of challenges reasonably than yield to US strain. Industry representatives additionally famous that whereas transitioning from Russian oil is technically possible, fast modifications are pointless as provide strains and international markets stay steady.Also learn: India prepares multi-pronged technique to protect financial system; particulars right here

Blow to the US too?

The tariff shock can be anticipated to hit the American financial system. According to a report by the State Bank of India (SBI), US GDP could possibly be shaved by 40–50 foundation factors, whereas inflationary pressures are prone to rise because of greater enter prices and a weaker greenback.Also learn: 50% tariffs on India to blowback on Trump? US GDP might shrink 40–50 bps, inflation to flare “We believe that US tariffs are likely to affect US GDP by 40–50 bps along with higher input cost inflation,” the SBI report famous. Import-sensitive sectors such as electronics, cars, and client durables are already feeling the pressure. The report added that US inflation is anticipated to stay above the Federal Reserve’s 2 per cent goal by way of 2026, pushed by tariff pass-through and forex results.

Trade deal still in limbo

Talks on a bilateral trade settlement (BTA) between India and the US have stalled, with the American delegation having postponed its scheduled August 25 go to to New Delhi.US Treasury Secretary Scott Bessent has accused India of “profiteering” by reselling Russian oil, whereas trade talks between the 2 sides stay on “thin ice,” based on consultants. Analysts warn that except Prime Minister Modi and President Trump have interaction immediately, possibilities of reviving the deal stay slim. The impasse raises uncertainty for exporters, who had earlier hoped for tariff reduction by way of a restricted trade pact.