Indian Exporters Shutting Shop, Bracing for Crash as Trump's 50% Tariff Kicks In; Forget the Hot Air, India is Not Ready for Multipolarity

A newsletter from The Wire | Founded by Tanweer Alam, Sidharth Bhatia, Pratik Kanjilal, Seema Chishti, Sushant Singh, MK Venu, and Siddharth Varadarajan | Contributing writer: Kalrav Joshi, with additional inputs by Anirudh SK

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Snapshot of the day

August 26, 2025

Siddharth Varadarajan

Indian exporters are bracing for disruptions as the United States on Tuesday confirmed that Washington would impose an additional 25% duty on Indian goods, thereby raising the overall tariff to 50%, with effect from August 27. According to the notice issued by the US Customs and Border Protection, the swingeing tariff will cover a wide spectrum of Indian exports, including textiles, gems and jewellery, leather, machinery, furniture and marine products. However, a few items like steel, copper and aluminium and sectors like pharmaceuticals, electronics and automobiles – passenger vehicles like SUVs and sedans – have been exempted. The US has said that India’s purchase of oil from Russia fuels Moscow’s war against Ukraine.

According to the estimates, the additional tariff will affect more than half of the $87 billion annual Indian exports to the US. The Federation of Indian Export Organisations is already sounding the alarm:

“Textiles and apparel manufacturers in Tirupur, Noida, and Surat have halted production amid worsening cost competitiveness. This sector is losing ground to lower‑cost rivals from Vietnam and Bangladesh. While for the seafood especially shrimps, as the US market absorbs nearly 40% of Indian seafood exports and the tariff increase risks stockpile losses, disrupted supply chains, and farmer distress.”

An industry official from the leather and footwear sector told PTI that companies would now be compelled to reduce staff and halt production until there is clarity on the trade agreement. “Job cuts will happen for sure in the jewellery and diamond sectors as the US is our largest market,” the news agency quoted an exporter as saying. “We need a long-term export strategy to deal with these high tariffs. We need interest subsidy, ease of doing business, timely refund of GST dues and reformed special economic zone law.” The head of the Apparel Export Promotion Council said the textiles sector, with exports of $10.3 billion, is one of the worst-impacted sectors.

A BBC investigation across key export hubs reveals industries reeling under trade uncertainty, with livelihoods hanging by a thread. India’s diamond sector – once a jewel of its export economy – has plunged to a two-decade low, battered first by weak Chinese demand and now by Trump’s escalating tariffs. For Surat, where nearly every diamond in the world is cut and polished, the US market is indispensable, accounting for nearly a third of its $28.5 billion in annual exports. Instead of resilience, Trump’s tariffs have left the city gasping, its workshops at a near standstill, reports The Washington Post.

Ukrainian President Volodymyr Zelenskyy has said Kyiv is relying on “India’s contribution” to end the war with Russia. While he appreciated India’s dedication to “peace and dialogue”, what he was really saying was that he