NEW DELHI: Donald Trump’s 50 percent tariffs on Indian exports to the US took effect on Wednesday, with the first impact expected to be felt by labor-intensive sectors such as textiles and jewelry.
In an unexpected move earlier this month, the US president imposed an additional 25 percent punitive levy on Indian goods, citing New Delhi’s purchases of Russian oil. This added to his prior 25 percent tariff on many imports from the South Asian nation, raising the total duty to 50 percent.
While India has referred to the tariff regime as “unfair, unjustified and unreasonable,” it has continued talks with Washington, with the Ministry of External Affairs saying on Wednesday that earlier this week “officials advanced bilateral initiatives” and “discussed trade and investment.”
New Delhi and Washington have been in tariff talks since the beginning of the year, in the wake of the US’ ongoing global tariff campaign. In February, Prime Minister Narendra Modi met with Trump in Washington, D.C. to discuss strengthening bilateral ties, trade relations, and the procurement of new US weapons and aircraft.
In April, the Trump administration said it was imposing a 25 percent reciprocal tariff on Indian goods over India’s continued purchases of Russian oil and to rectify trade imbalances. Though a new deal was expected in July, it was not approved by Trump, leading to a breakdown in talks.
US levies on Indian goods are the highest in Asia and one of the highest tariffs the US has ever imposed on a major trading partner.
As Indian exports to the US are expected to slow down, it will have multiple impacts on India’s economy, including its currency, stock market and investment, said Arun Kumar, a retired economics professor at Jawaharlal Nehru University.
“Our exporters will suffer (in) labor-intensive areas like gems and jewelry, apparel, shrimp … When these units close down, there will be unemployment,” he told Arab News.
Compared to its competitors in these sectors — like Bangladesh, Vietnam, Pakistan or China — the tariffs slapped on India are much higher.
“The competitors will be able to supply at much lower prices than the Indian listing,” Kumar said.
“There will be multiple impacts on the Indian economy through this slowdown in the exports to the US.”
Mallikarjun Kharge, president of the Congress — India’s largest opposition party — warned that hundreds of thousands of jobs in the textile and jewelry sector are endangered.
“The Indian textile export sector is facing potential job losses of about 500,000 including both direct and indirect employment,” he said on X. “In the Gems & Jewellery sector, 150,000 to 200,000 jobs could be at risk if the tariffs continue.”
The US is India’s largest export market, accounting for 18 percent of its exports and 2.2 percent of its gross domestic product.
In a letter to parliament, the Indian Ministry of Commerce and Industry estimated last week that the tariffs will impact $48.2 billion worth of exports, while the Delhi-based Global Trade Research Initiative said the levies could reduce Indian GDP by up to 0.9 percentage points.
