Trump's 50% Tariff: Who Will Bear the Brunt in India?



US President Donald Trump's devastating 50% tariff on Indian goods, imposed Wednesday over New Delhi's Russian oil purchases, threatens to unleash economic chaos across key sectors, with millions of jobs at risk and entire industries facing potential collapse.


The Ripple Effect: Who Gets Hit Hardest

The tariff tsunami will sweep across India's economic landscape, but some sectors face complete devastation. Industry experts warn that 55% of India's $87 billion in annual exports to America worth approximately $48 billion, now faces crushing duties that could render Indian products uncompetitive.


Textiles and Apparel: A Sector in Crisis

The textile industry faces an existential threat, with over 2 million jobs potentially at risk. The US accounts for 33-34% of India's garment exports, worth $5.3 billion in FY25, and 59% of home textile shipments.

Critical impact points:

  • Gokaldas Exports derives 23% of revenue from the US market and saw its stock plummet 15.9%
  • Welspun Living earns 63% of revenue from America
  • Himatsingka Seide generates 83% of revenue from US sales
  • Kitex Garments depends on the US for 70% of its revenue

Textile exporters have already begun halting US order manufacturing entirely. A. Sakthivel, chairman of the Tiruppur Exporters Association, confirmed: "Indian exporters have decided to stop manufacturing orders for the US". The industry now faces effective tariff rates of 64% compared to Bangladesh's 20% and Vietnam's 19%.


Seafood Industry: 'Doomsday' Scenario

The seafood sector confronts what industry leaders call a "doomsday" situation. The US represents 40% of India's total seafood exports, valued at $6.84 Billion, with shrimp forming the bulk of shipments.

Pawan Kumar G, president of the Seafood Exporters Association of India, warned: "This is a doomsday for the seafood industry. It will have an effect on the farmers too". The industry estimates $73 Million in immediate losses from order cancellations and containers stuck in transit.


Gems and Jewelry: Polishing Industry Under Pressure

India's diamond cutting and polishing hub faces severe disruption, with 36% of cut and polished diamond exports heading directly to the US. The sector now confronts 52.1% effective tariff rates compared to competitors.


Key vulnerabilities:

  • India processes 80% of the world's rough diamonds
  • The US and China are primary destinations for Indian polished diamonds
  • Industry may shift exports through trading hubs like Dubai and Belgium to circumvent tariffs


Auto Components: Half the Business at Risk

The automotive parts industry faces immediate impact on nearly half of its $6.97 Billion worth of exports to America. The US represents 32% of total auto component shipments from India in FY25.

Most exposed companies:

  • Sona BLW derives 40% of revenue from the US
  • Ramkrishna Forgings earns 27% from American markets
  • Bharat Forge generates 25% of revenue from the US
  • Tata Motors has 23% exposure through commercial vehicle components


Pharmaceuticals: Under the Sword of Damocles

While currently exempt, the pharmaceutical sector faces Trump's threat of 250% additional duties. This poses existential risks for an industry that supplies 50% of US generic drugs.

High-risk companies:

  • Gland Pharma and Aurobindo Pharma each derive 50% of revenue from the US
  • Dr. Reddy's earns 45% from American markets
  • Lupin generates 38% of revenue from US sales
  • Sun Pharma depends on America for one-third of revenues


The MSE Catastrophe

Small and medium enterprises face the most brutal impact, with industry leaders warning of massive job losses across labor-intensive sectors. The Federation of Indian Export Organizations emphasizes that MSEs cannot absorb sudden cost escalations on razor thin margins.

Sectors facing MSME devastation:

  • Over 4 million people employed in textile manufacturing alone
  • 11.12 million workers in apparel production
  • Marine products, leather, and footwear industries facing widespread unemployment

Ajay Sahai, FIEO director general, warned: "For a large number of MSE led sectors, absorbing this sudden cost escalation is simply not viable. Margins are already thin, and this additional blow could force exporters to lose long standing clients".


Stock Market Carnage

Indian equity markets are witnessing sector specific destruction, with export-oriented companies bearing the brunt:

Textile stocks massacre:

  • Gokaldas Exports: Down 15.9% since tariff announcements
  • Welspun Living: Fell 5%
  • Kitex Garments: Dropped 4%
  • Vardhman Textiles: Declined 3%

Auto component bloodbath:

  • Balkrishna Industries: Down 2.5%
  • Ramkrishna Forgings: Fell 2%
  • Steel Strip Wheels: Plummeted 4% (63% export exposure to US)

Chemical sector impact:

  • Navin Fluorine International: 24% revenue exposure
  • PI Industries: 20% vulnerability
  • SRF Limited: 6% exposure risk


Regional Economic Impact

The tariff war's effects vary dramatically across Indian states:

Punjab's limited exposure: World MSME Forum president Badish Jindal notes that exports form just 10% of Punjab's economy, with only 30% going to the US, potentially insulating the state from severe impact.

Maharashtra and Gujarat face maximum pain as major textile and chemical export hubs with substantial US exposure.

Tamil Nadu's textile clusters around Tiruppur confront potential shutdowns as manufacturers halt US orders entirely.


Economic Growth Under Siege

Leading economists project severe GDP impact:

HDFC Bank: Forecasts growth falling below 6% if tariffs persist, representing a 40-50 basis point hit

Capital Economics: Projects GDP growth slowing to 6% from 7%

Goldman Sachs: Estimates 0.6 percentage point GDP reduction

SBI Research: Anticipates 25-30 basis point growth impact

Sakshi Gupta, Principal Economist at HDFC Bank, warned of cascading effects: "The second-round impact on private capex, domestic manufacturing as well as labor markets could emerge as a key risk over the coming months".


The Human Cost

Beyond statistics lies human tragedy. Industry leaders paint a grim picture:

Textile sector alone: Over 2 million direct jobs at immediate risk

Seafood industry: Farmers may halt seeding operations entirely

MSE workers: Hundreds of thousands face potential layoffs

Supply chain disruption: Affecting millions employed in logistics and support services

Israr Ahmed, former FIEO Vice President, characterized vulnerable sectors as "employment-heavy and margin-thin," warning of "massive job losses" particularly in apparel, textiles, marine products, and footwear.


Strategic Response and Hope

Despite the devastating impact, India maintains a 21day negotiation window before additional tariffs take effect on August 27. The government is exploring multi-pronged strategies including:

  • Sectoral support measures without direct subsidies
  • Export promotion missions with additional funding
  • Alternative market diversification to reduce US dependency
  • Diplomatic engagement through planned trade delegation visits

Indian Commerce Minister Piyush Goyal has ruled out direct subsidies but floated "innovative" support measures including reduced borrowing costs for MSEs and cut testing fees for small firms.


The tariff war represents more than trade policy, it's reshaping India's industrial landscape, threatening millions of livelihoods, and forcing a fundamental recalibration of the country's export strategy. While some sectors may eventually adapt through diversification and innovation, the immediate human and economic cost promises to be severe, with vulnerable workers and small businesses bearing the heaviest burden of Trump's aggressive trade offensive.

The tariff war marks a decisive moment in US-India relations, testing whether economic coercion can reshape India's strategic autonomy or whether it will drive New Delhi further into the arms of America's rivals. With billions in trade and a crucial geopolitical partnership at stake, the coming weeks will determine whether diplomacy can prevail over escalating economic warfare.

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