50% US tariff on India takes effect: What exports get impacted, what don't

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With tariffs coming into effect on Wednesday, India is bracing for a major impact on exports to the United States, affecting key sectors and underscoring tensions in trade ties.

Donald Trump’s tariff hike on Indian goods takes effect on Wednesday. (AFP)

President Donald Trump had initially announced a 25 per cent tariff on Indian goods. Earlier this month, he signed an executive order imposing an additional 25 per cent due to India’s purchases of Russian oil, bringing the total US duties on Indian products to 50 per cent.

The Indian government estimates the tariffs will impact $48.2 billion worth of exports, The Associated Press reported. The news agency cited unnamed officials who warned the new duties could make shipments to the US commercially unviable, leading to job losses and slower economic growth.

Labour-intensive sectors such as textiles, leather goods, gems and jewellery, food products, and automobiles are expected to face the biggest challenges, according to the Global Trade Research Initiative.

Sectors to be impacted

According to estimates by the Global Trade Research Initiative, cited by the Associated Press, labour-intensive sectors such as textiles, gems and jewellery, leather goods, food products, and automobiles are likely to be hit hardest.

Reuters reported that the impact could also extend to capital goods, pharmaceuticals, smartphones, chemicals, oil and gas.

“The new tariff regime is a strategic shock that threatens to wipe out India’s long-established presence in the US, causing unemployment in export-driven hubs and weakening its role in the industrial value chain,” The Associated Press quoted Ajay Srivastava, founder of the think tank, as saying.

Exporters express concern

Puran Dawar, a leather footwear exporter from Agra, said the industry will face a major hit unless domestic demand picks up or other overseas markets absorb the exports.

“This is an absolute shock,” Dawar said, adding that US consumers could also be affected by higher prices.

Ajay Sahai, director general of the Federation of Indian Export Organisations, said, “Some product lines could become unviable overnight, particularly for small and medium enterprises dependent on the US market.”

Government's response

Prime Minister Narendra Modi has maintained that the interests of farmers, small businesses, and the dairy sector will remain a priority. “My government will ensure they aren’t impacted,” he said, referring to ongoing trade pressure from the US.

The Indian government is considering measures to support exporters, including financial incentives, favourable loan rates, and steps to boost local consumption ahead of the Diwali festival.

Officials are also exploring opportunities to expand exports to Latin America, Africa, and Southeast Asia, while trade talks with the European Union could gain urgency as India seeks to diversify its overseas markets, The Associated Press reported.

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