Trump's 50% tariffs take effect today: Which sectors are in firing line?

The Donald Trump-led US administration links the 50% duty to India's Russian oil imports; sectors from textiles to seafood brace for impact

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The trade rift between India and the US escalated on August 27, when US President Donald Trump's latest tariff hike took effect. The Trump administration announced an additional 25 per cent duty on Indian exports, doubling the overall levy to 50 per cent.

 

Tariff hike: From August 27, Indian goods entering the US will face a total tariff of 50 per cent. This doubles the existing 25 per cent rate and covers a wide basket of products.

 

Why it matters

The US is India’s largest export market, accounting for nearly a fifth of outbound shipments. A 50 per cent duty could make Indian goods less competitive compared with Vietnam, Bangladesh and Mexico.

 

Reason from US admin

The Trump administration argues that India’s imports of discounted Russian oil undermine US sanctions aimed at pressuring President Vladimir Putin into a ceasefire deal with Ukraine. Tariffs are being used as leverage to press New Delhi to scale back its oil purchases, they said.  ALSO READ | Russia invites Indian exports as US tariffs hit trade, defends oil ties

 

Indian sectors already hit by Trump tariffs

Textiles and apparel: Orders are being diverted to rival Asian exporters.

 

Gems and jewellery: In FY24, India exported gems and jewellery worth $9.2 billion. Shipments have now been halted, leading to a blow to employment in the industry.

 

Auto parts, pharmaceuticals, electronics: Margins under pressure due to higher costs.

 

Seafood: Shrimp exporters, who send more than half their output to the US, fear steep losses and order cancellations as the higher tariff comes into effect.

 

In FY24, India shipped goods worth $86.5 billion to the United States, making up about 20 per cent of the country’s total merchandise exports.

 

What could be next?

Analysts warn that a prolonged tariff regime may extend pain to engineering goods, leather and consumer durables, all of which rely heavily on the US market.

 

Impact on exports

Think tank GTRI projects India’s shipments to the US could decline by 40 to 50 per cent, eroding foreign exchange earnings.

 

Impact on India's economic growth

Economists say the new US tariffs could slow India’s economy in the coming year. If the duties stay in place, growth in FY26 may be 0.2-0.4 percentage points lower than expected. Analysts also warn that further penalties, such as those linked to Russian oil or defence deals, could make the slowdown worse by reducing investment flows.

 

India’s stance on Trump’s tariff

The Ministry of External Affairs has described the move as “unfair and unreasonable". Beyond this, New Delhi has not announced any formal counter-measures, though the government has said it will safeguard farmers and small exporters. Officials maintain that oil imports are commercial decisions and not political.

 

Prime Minister Narendra Modi also pledged to protect farmers and small exporters from the fallout and stressed the importance of self-reliance. Meanwhile, the government has halted its plans to purchase new US weapons and aircraft.

 

India’s stance on Russian oil

The government maintains that energy imports are market-driven and reflect India’s need to secure affordable supplies. Officials have not signalled any cut in Russian oil purchases.