On August 27, 2025, U.S. President Donald Trump implemented a sweeping 50% tariff on Indian exports—combining a 25% “reciprocal tariff” and an additional 25% penalty tied to India’s purchase of Russian oil. This marked a sharp escalation in U.S.-India trade tensions.
2. What Sectors Are Hit?
Labour-intensive sectors are bearing the brunt:
- Textiles, apparel, gems & jewellery, furniture, carpets, shrimp—all hit hard
- Approximately 66% of exports to the U.S. now face crippling tariffs
Pharmaceuticals, electronics, and semiconductors remain exempt, offering some relief.
3. Economic Fallout
- India’s exports to the U.S. may plunge from $87B (2024) to approximately $49.6B (2025)—a 40–45% drop.
- Industry hubs like Surat (diamonds) are in crisis; recent reports estimate ~50,000 layoffs with more at risk.
4. India’s Countermeasures
- PM Modi doubled down on “Swadeshi,” urging citizens and businesses to prioritize ‘Made in India’ products.
- Government planning GST cuts and export-promoting reforms, while fast-tracking FTAs with new markets.
5. Geopolitical Tensions
Trade friction has spilled into diplomacy—some see this as a setback to 20+ years of warming Indo-U.S. relations and cooperation through platforms like the Quad.
6. Wrapping Up
This major tariff hike is a reminder that global trade—especially with the U.S.—carries unpredictable risks. India’s economic resilience will now hinge on domestic demand, diversification of export markets, and policy agility.
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