US Tariff Hike on Indian Exports: Key Sectors Likely to Suffer the Most

The United States has dealt a major blow to Indian exporters by imposing a steep 50% tariff on several key Indian goods. This move follows New Delhi’s continued oil trade with Russia, drawing a sharp response from Washington. The sudden and unilateral decision has shaken major Indian export sectors such as textiles, gems and jewellery, chemicals, and seafood. Industry leaders fear that this could cut exports to the US by nearly half, hurting both revenues and long-term trade relations.

Why Did the US Impose the 50% Tariff?

The US decision to raise duties by an additional 25% (on top of existing 25%) is linked to India’s refusal to halt oil imports from Russia amid geopolitical tensions. While other countries like China and Turkey continue similar trade without facing such penalties, India has been singled out, leading to criticism over Washington’s selective actions.

The tariff was announced on July 31, 2025, and will be implemented in two phases: one starting August 7 and the other on August 27.

Key Export Sectors to Be Hit the Hardest

According to the Global Trade Research Initiative (GTRI), the new tariffs will drastically increase the cost of Indian goods in the US market, making them less competitive. Here’s a breakdown of the most affected sectors:

1. Textiles and Apparel

• India exports $10.3 billion worth of textiles and clothing to the US.
• Tariffs will now reach nearly 60-64% on both woven and knitted garments.
• The Confederation of Indian Textile Industry (CITI) has expressed deep concern, calling it a major blow to an already struggling sector.

2. Gems and Jewellery

• One of India’s top exports to the US, worth $12 billion.
• Will now face around 52% duty, significantly eroding cost competitiveness.

3. Chemicals and Organic Products

• Organic chemical exports to the US will be subject to 54% tariffs.
• Affects approximately $2.34 billion worth of trade.

4. Shrimp and Seafood

• India’s $2.24 billion shrimp exports to the US may see a sharp decline.
• Already battling thin profit margins, exporters face the threat of losing key buyers.

5. Leather and Footwear

• Trade worth $1.18 billion.
• Now facing import duties of over 50%, according to GTRI.

6. Machinery and Mechanical Appliances

• With trade close to $9 billion, these goods will now attract 51.3% duty.

7. Furniture and Carpets

• Carpets (52.9%) and furniture (52.3%) will also see a cost spike.

Reactions from Industry and Experts

Federation of Indian Export Organisations (FIEO)

President S C Ralhan called the decision a “severe setback”, affecting 55% of Indian shipments to the US. He warned that exporters could face 30-35% disadvantage compared to competitors from other nations, resulting in order cancellations and client losses.

Global Trade Research Initiative (GTRI)

Founder Ajay Srivastava suggested that India should not abandon Russian oil solely to appease the US. He emphasized the need for calm, advising no immediate retaliation, and underlined the importance of strengthening strategic ties with other global players like Russia and China.

India-US Bilateral Trade Snapshot

• Total Trade (2024-25): $131.8 billion
• Indian Exports: $86.5 billion
• US Imports to India: $45.3 billion

The new tariffs place India and Brazil at the top of the list of countries facing highest US tariffs globally.

What Lies Ahead?

The immediate outlook for Indian exporters appears grim. The high tariffs will hurt competitiveness, especially for MSMEs, which form the backbone of many export sectors. Unless the issue is diplomatically resolved, India risks losing long-standing market share in the US.

However, the situation also opens up space for India to diversify export markets and reconsider its strategic trade alignments. Analysts urge the Indian government to engage in calm diplomacy, while also preparing backup plans to protect domestic industries.