US Doubles Tariffs on Indian Goods Starting Today, Threatening Key Sectors and Economic Growth
Today, the United States has imposed a 50% tariff on a wide range of Indian exports, significantly escalating trade tensions. This move doubles the existing 25% tariff already in place from the Trump administration and is a direct response to India’s continued purchase of Russian crude oil and military equipment.
What the New Tariff Means for India
- The 50% tariff will affect nearly two-thirds of India’s exports to the US, worth approximately $60 billion.
- Key labour-intensive sectors such as textiles, gems and jewellery, carpets, shrimp, and furniture are expected to face severe challenges.
- Small and medium enterprises (SMEs) are particularly vulnerable, raising concerns about widespread job losses.
- India’s total exports to the US, currently valued at about $86.5 billion, could shrink to $49.6 billion by FY26.
Expert Opinions on the Economic Impact
Ved Jain, former ICAI President, highlighted the difficult position India is in:
“India buys Russian oil because it is economically viable. If India stops, the economy and exports will suffer. But continuing invites US tariffs, which also hurts exports. It’s a tough choice between economic efficiency and trade challenges.”
Industry Voices
Bhadresh Dodhia, a textile factory owner, expressed concerns about the tariff’s impact:
“A 50% tariff is unsustainable, especially in textiles where profit margins are very thin. The extra cost will eventually be passed on to consumers. We hope this additional tariff will be removed soon.”
Potential Impact on the US Economy
Economist SP Sharma warned the tariff hike could backfire on the US:
“Higher tariffs will increase inflation in the US, which is already a concern. Inflation above 2% slows growth, and the US economy could face a slowdown similar to the period under the previous administration.”
Winners and Losers in the Global Trade Game
- Competitors like China, Vietnam, Mexico, and Turkey are likely to benefit as US buyers seek alternatives.
- The US accounts for 18% of India’s total goods exports, so the tariff’s ripple effect will hit multiple Indian industries.
- Around 30% of exports will remain duty-free, and 4% will face a 25% tariff, but the majority will bear the 50% tariff.
The implementation of a 50% tariff on Indian goods today marks a critical escalation in US-India trade tensions. This tariff threatens key Indian industries, jobs, and overall export growth. With global competitors ready to fill the void, India faces significant economic challenges ahead.
