New Delhi: Indian exporters woke up to a harsh economic reality today as the United States implemented an additional 25% tariff on top of the existing 25%, bringing the total duty on a broad range of Indian goods to a staggering 50%. The move, set to take effect from 9:31 am, is a retaliation for India’s ongoing purchases of Russian crude oil and military equipment.
Economic analysts warn that the impact will be severe and far-reaching. According to the Global Trade Research Institute (GTRI), nearly two-thirds of India’s exports to the US, valued at close to $60 billion, will now be caught in the new tariff net. This will make Indian goods significantly more expensive in American markets, undermining competitiveness and creating an uphill battle for exporters against global rivals.
The dilemma facing India is stark. Former ICAI President Ved Jain explained, “The Russian oil imports are economically viable for India. Halting them would make the economy inefficient, yet continuing invites trade retaliation. India must choose between two evils: economic inefficiency or export challenges.”
Labour-intensive sectors are bracing for a severe shock. Industries such as textiles, gems and jewellery, carpets, shrimp, and furniture face enormous pressures, with small and medium enterprises at the greatest risk. Job losses across these sectors are an imminent threat. Bhadresh Dodhia, a textile factory owner, described the crisis vividly: “Absorbing such a heavy tariff is impossible for any importer, especially in textiles, where margins are razor-thin. Ultimately, the consumer will bear the brunt, and in the short term, we are all hoping for a miracle to reduce this additional 25% duty.”
The economic ripple effect may extend beyond India. US economists caution that higher tariffs could raise domestic prices, slow growth, and worsen inflation. SP Sharma highlighted the domestic risks: “This tariff escalation will likely increase inflation in the US, which is already a concern. If inflation persists, it will drag down growth, which has historically been modest.”
India’s exports to the US, totaling around $86.5 billion, are projected to shrink to $49.6 billion by FY26. Only 30% of exports will remain duty-free, 4% will face a 25% tariff, and a massive 66% covering India’s most vital export categories will be hit with the full 50% levy. Competitors such as China, Vietnam, Mexico, and Turkey are poised to seize this opportunity, filling the vacuum left by costlier Indian goods.
With the US accounting for 18% of India’s total goods exports, the fallout from Washington’s tariffs threatens to disrupt industries, jobs, and growth prospects. For India, the immediate challenge will be navigating this high-stakes trade environment while exploring alternative markets to cushion the blow and maintain economic stability.