Editor’s Note
The recent U.S. decision to double tariffs on certain Indian goods to 50% marks a significant escalation in trade tensions. This analysis examines the potential ripple effects for key export sectors, from textiles to jewelry, and what it means for businesses navigating an increasingly complex global trade landscape.
Donald Trump has once again dropped a tariff bomb on India, doubling the previously imposed 25% tariff to 50%. The implementation of this tariff could have a significant impact on industries ranging from textiles to jewelry in the country.
It should be noted that Trump had threatened to impose extra tariffs on India within 24 hours on Tuesday, and on Wednesday, he signed an executive order in this direction, announcing an increase in tariffs on India from 25% to 50%. The US President cited India’s continued purchase of Russian oil as the reason behind this move. He signed a nine-point order, which mentioned issues including tariffs and expanding the scope of duties. India has now joined the list of countries, including Brazil, on which a 50% tariff is applied.
The impact of Trump’s 50% tariff will be seen on the country’s apparel and footwear businesses because textiles are exported in large quantities, and the US is the largest importer of Indian textiles and footwear. The implementation of a 50% tariff instead of 25% will make these products even more expensive in the American market, which could lead to a decrease in demand and adversely affect India’s shipments and business. The US sources approximately 14% of its textile imports from India, and this trade with the US is worth $5.9 billion.
The second major victim of Donald Trump’s tariff bomb could be India’s jewelry and diamond business. India is one of the world’s largest diamond exporters, and a significant portion of total diamond exports goes to the US. The doubling of tariffs will lead to a substantial increase in the prices of jewelry and diamonds, and their demand could be severely affected.
The reason behind this is that US buyers, in the event of price increases, will seek other alternatives for jewelry and diamonds where tariffs are lower. It should be noted that India accounts for 44.5% of the total diamonds imported into the US, with a value of approximately $6.7 billion. As for jewelry, Indian jewelry holds a 15.6% share in total US imports, representing a $3.5 billion business.
The auto sector could also be significantly affected by falling within the range of Trump’s tariff bomb. India has been exporting auto parts to the US in large quantities, and with a 25% tariff already on steel and aluminum, the 50% tariff imposed by Trump could severely impact Indian demand.
Apart from the textile and diamond & jewelry sectors, Trump’s move will have a significant impact on other sectors as well. Among these, the $7.5 billion electronics business will be affected, in which India holds a 6.5% share of total US imports. Additionally, the pharmaceutical machinery industry, which holds a 3.1% share in the US market, is also likely to see a major impact on its business.
—- End —-
