50% US tariffs force India to rethink trade, jobs, and market strategy

In a reaction on X, Congress leader Jairam Ramesh said, “The Trump double tariff has now come into effect, and it will undoubtedly hit our labour-intensive exports to the US—particularly textiles, gems and jewellery, leather, marine products, and engineering. On top of this, the US Commerce Secretary has voiced concerns over the H1B visa system, which mainly benefits Indian IT professionals. What Prime Minister Modi hailed earlier this year as his ‘MEGA’ formula—MAGA plus MIGA—has now turned into a ‘MAHA’ headache for India.”

Economic and employment impact

Analysts predict exports from affected sectors could fall by up to 70 per cent, shrinking overall US shipments by 43 per cent and risking hundreds of thousands of jobs. Layoffs are reported across gems, jewellery, garments, and shrimp processing units. The GDP impact for FY26 is estimated at 0.4–0.5 per cent.

Strategic responses

Exporters are:

• Offering deep discounts and revising contracts to retain US buyers.

• Exploring alternative markets in Russia, CIS countries, Latin America, Africa, and China.

• Pivoting to domestic sales where possible.

• Frontloading shipments before the tariff deadline to minimise immediate losses.

The Indian government is accelerating trade talks with the UK and EU, offering GST reductions and production-linked incentives, and promoting “Made in India” initiatives to buffer affected sectors.

Talks stalled

Bilateral trade negotiations have stalled, with a US delegation visit to Delhi postponed. The tariffs may sour investment relations and strategic cooperation, while competitors like Vietnam, Bangladesh, and Cambodia stand ready to capture Indian market share. India has denounced the duties as “unfair, unjustified, and unreasonable,” pledging to protect national interests.

With textiles ($16 billion), gems and jewellery ($9 billion), and leather ($4 billion) now fully exposed, exporters face a critical period. Pharmaceuticals ($11 billion), electronics ($7 billion), and petroleum products ($9 billion) remain exempt, while auto parts ($3.4 billion) face moderate risk.

The new tariffs are forcing rapid market diversification and strategic recalibration, as the human and economic toll of this trade shock becomes increasingly apparent.