From jobs to growth, what’s at stake for India as Trump’s 50% tariffs kick in?

It’s Trump tariff day in India. At 9.31 am, local time, the US president’s new tariff rate of 50 per cent kicks in, which is expected to pose a big challenge to India and its exporters. While 25 per cent tariffs were already in place, another 25 per cent will be imposed starting today as a result of New Delhi’s purchase of Russian oil.

Notably, just two days before the tariffs kicked in, Prime Minister Narendra Modi said at an event in Gujarat’s Ahmebadad that it as an era of “economic selfishness” where nations secure their own interests first. He insisted India would withstand the pressure: “No matter how high the pressure, India will continue to build its strength to withstand it.”

For India, these tariffs are a direct blow to its export market, with subsequent consequences for jobs and growth in the country.

Here’s a look at just what is at stake for India as Trump’s tariffs, among the highest in the world, kick in.

Indian exports at risk

With Trump’s tariffs kicking in, Indian exports to the US would be the most hit. Most analysts note the higher US tariffs risk substantially diminishing the allure of Indian exports to the US, compared to regional peers.

But how much will these tariffs hurt Indian exporters. Currently, India counts the US as its largest single exporter. Official data revealed that in the year ended in March 2025, India’s exports reached $434 billion and nearly 20 per cent or $86.51 billion worth of goods were exported to the US.

Now, with Trump’s 50 per cent tariffs kicking in, these exports are at risk. Global Trade Research Initiative, a think tank, notes that of the $86.51 billion worth of goods exported to the US, roughly $60.2 billion (66 per cent) will now face the 50 per cent tariff. It estimated that product exports to the US could fall to $49.6 billion this year from nearly $87 billion in 2024-25.

The products most at risk owing to Trump’s tariffs are textiles, gems and jewellery, shrimp, carpets, and furniture. The GTRI estimates exports in these areas could shrink by as much as 70 per cent.

As Shilan Shah, deputy chief emerging markets economist at Capital Economics, said in a note, “India’s attractiveness as an emerging manufacturing hub will be hugely undermined,” adding that the extra 25 per cent tariff is “large enough to have a material impact.”

The sky-high tariffs also means that erodes India’s competitiveness in the US market, giving an edge to products from countries like Vietnam, Bangladesh, Cambodia, and even China and Pakistan, as they face lower tariffs.

Job losses

The tariffs imposed by Trump will see a cascading effect on jobs in India as well. Labour-intensive sectors such as textiles, gems and jewellery, carpets, shrimp, and furniture fear widespread job losses as a result of the US tariffs.

Experts and industry insiders note that if Indian shipments to the US decline, millions of workers in sectors such as jewellery and seafood would be affected. In fact, Kirit Bhansali, chairman of the Gem & Jewellery Export Promotion Council (GJEPC), called duties “doomsday” for the industry.

The textile industry is particularly wary of Trump’s tariffs as they work on thinner margins. As Vijay Kumar Agarwal, chairman of Creative Group that specialises in both woven and knitted fabrics and apparel, told Moneycontrol that they may have to close at least two factories out of the eight, leading to job losses for around 6,000 to 7,000 workers.

“We will have to close down a few factories, we have to give discounts to buyers, at 50 per cent it can’t go on for long, export of textiles from India to the US will probably not exist apart from some high-value items. Honestly, we are at a loss,” Agarwal told Moneycontrol.

Even the Confederation of Indian textile industry noted that Trump’s tariffs would be a significant pain point for them. “Without a doubt, the new tariff rate is going to seriously test the resolve and resilience of India’s textile and apparel exporters as we will not enjoy a significant duty differential advantage vis-à-vis many other countries, except Bangladesh, with whom we compete for a larger share of the US market.

India’s growth to be affected

Analysts note that Trump’s tariffs could also hit India’s growth with many pointing that India’s GDP will see an impact. For instance, Gaura Sengupta, chief economist at IDFC First Bank, estimates that the tariff could shave 0.4 per cent off FY26 GDP growth.

Meanwhile, Sakshi Gupta, principal economist at HDFC Bank, told Economic Times that the impact could push growth below six per cent, saying, “We will have to significantly lower FY26 GDP growth forecast to below six per cent, baking in at least a 40–50 bps hit – double from our earlier estimates.”

Goldman Sachs also estimate that the 50 per cent tariff on Indian products could result in a drop of 0.6 percentage points on its GDP. Last week, Capital Economics said full US tariffs would chip 0.8 percentage points from India’s economic growth both this year and the next.

Bloomberg also notes that the tariffs could further pressure corporate earnings after a weak quarter, particularly for banks and IT firms, despite recent consumption tax cuts by Prime Minister Narendra Modi aimed at boosting the economy.

Readying for the tariff impact

Exporters are bracing themselves for the impact of Trump’s tariff. They have already urged the government to introduce a targeted scheme, such as duty drawback or reimbursement.

Meanwhile, the Commerce Ministry said India had identified nearly 50 countries to which it could boost exports, particularly items such as textiles, food processed items, leather goods and marine products.

The coming months will be significant for India’s exporters as they adjust to the new US tariff regime. They will have to wait and watch if diplomacy can help alleviate this tariff pain or is India in for a long, painful trade war with the US.

With inputs from agencies

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