New Delhi:  India’s export sector is bracing for a severe blow after the United States enforced steep new tariffs, raising duties on a wide range of Indian goods to as high as 50 percent. The move, which took effect on Wednesday, threatens nearly 55 percent of India’s $87 billion in annual exports to the American market.

The White House has justified the tariff escalation as retaliation for India’s continued purchase of discounted Russian oil, which Washington argues indirectly funds Moscow’s war in Ukraine. The decision doubles down on earlier 25 percent duties, now making Indian exports among the most heavily taxed in the U.S. market.

Sectors most affected include textiles, apparel, gems and jewelry, leather, carpets, furniture, marine products, shrimps, and engineering goods. Collectively, these industries account for a significant portion of India’s export earnings. Analysts warn that the duties could make many Indian products uncompetitive, with some categories facing effective tariffs exceeding 60 percent. Pharmaceuticals, electronics, and petroleum products have been spared, offering limited relief to exporters.

Economists predict that India’s shipments to the U.S. could shrink to about 49–50 billion dollars in 2025–26, marking a fall of nearly 40–45 percent compared to last year. The Global Trade Research Initiative has cautioned that such a decline could shave almost one percentage point off India’s GDP growth, dragging the economy below the six percent mark. Financial markets have already shown strain, with the rupee slipping to 87.68 against the dollar and equity indices posting modest declines.

The political fallout has been immediate. Prime Minister Narendra Modi, addressing the crisis, said India was “ready to pay a heavy price” to defend its economic independence and safeguard domestic producers. Despite escalating trade tensions, both sides maintain that strategic cooperation frameworks such as the Quad remain intact, though trust between New Delhi and Washington has weakened.

India has begun rolling out countermeasures aimed at cushioning the shock. These include financial aid packages, loan subsidies, adjustments to the goods and services tax (GST), and export rebates to enhance competitiveness. The government is also urging exporters to diversify into new markets, including Latin America, Africa, Southeast Asia, the Middle East, and Europe.

Observers say the tariff war could significantly alter global supply chains, with countries like Vietnam, Bangladesh, and China poised to capture market share lost by India in the U.S. market. At the same time, New Delhi is expected to deepen its economic and diplomatic ties with Beijing and Moscow, signaling a potential realignment in global trade dynamics.

While India seeks to mitigate immediate losses, the crisis underscores the fragility of economic ties between the world’s largest democracies. The outcome of this tariff confrontation will likely shape not only bilateral relations but also broader global trade patterns in the months ahead.