NEW DELHI — U.S. President Donald Trump’s new 50% tariff regime on Indian goods took effect Wednesday, threatening billions in exports and raising fears of job losses in India’s largest overseas market.
Trump had initially imposed a 25% duty, but earlier this month doubled the penalty with an executive order citing India’s continued purchase of Russian oil. The move now affects an estimated $48.2 billion worth of exports.
Indian officials warn that entire shipments to the U.S. could become commercially unviable, dealing a heavy blow to the economy and its export-driven workforce.
Analysts say labour-intensive sectors will bear the brunt — from textiles, gems, jewelry, and leather goods to food products and automobiles. A report by the Global Trade Research Initiative called the duties a “strategic shock” that risks wiping out India’s long-established presence in the U.S. market.
Some relief came with exemptions for pharmaceuticals and electronics, key industries in which India has major exposure. But exporters fear the tariffs will crush small and medium-sized enterprises that rely heavily on American buyers.
“This is an absolute shock,” said Puran Dawar, a footwear exporter from Agra whose clients include Zara. “The U.S. should understand these tariffs will hurt their own consumers too.”
Political tensions rise
The tariffs deepen an already fraught trade relationship. Washington has long pushed New Delhi to open up its agriculture and dairy markets to cheaper U.S. imports. India has refused, with Prime Minister Narendra Modi vowing to protect farmers and small businesses from being undermined.
“For me, the interests of farmers, small businesses and dairy are topmost. My government will ensure they aren’t impacted,” Modi said at a rally in Gujarat, accusing the West of engaging in a “politics of economic selfishness.”
A planned sixth round of U.S.-India trade talks was abruptly canceled this week.
India looks inward and beyond
To cushion the blow, India is preparing a package of domestic reforms and incentives. The government is considering cuts to the goods and services tax on items like insurance, cars and appliances ahead of the Diwali festival season, while also weighing favorable loan rates for exporters.
Officials are also fast-tracking efforts to diversify export markets, including trade talks with the European Union, Latin America, Africa and Southeast Asia.
For now, the tariffs mark one of the sharpest turns in India–U.S. economic ties in decades — and raise questions about how far Modi’s government can shield its industries from Washington’s trade war.