From Wednesday, Indian exports to the US face a major setback as Donald Trump’s administration begins enforcing 50% tariffs on a wide range of goods. The move is expected to severely affect low-margin, labour-intensive sectors such as apparel, textiles, gems and jewellery, shrimps, carpets, furniture, and handicrafts — all of which are heavily dependent on the American market.

Trade experts estimate India’s merchandise exports to the US could shrink by as much as 40–45% in 2025-26 compared to last year. The Global Trade Research Initiative (GTRI) projects exports may fall to about -$49.6 billion, from nearly -$87 billion in FY25. Nearly two-thirds of India’s shipments to the US will now face tariffs of up to 50%, making them uncompetitive.

About 30% of Indian exports, worth -$27.6 billion, remain duty-free — mainly pharmaceuticals, electronics, and petroleum products — while another 4% will face 25% tariffs, primarily auto parts. But competitors such as Vietnam, Bangladesh, and Cambodia, which continue to enjoy lower tariffs, are likely to capture India’s lost market share.

The tariffs include a 25% duty announced in July, plus an additional 25% imposed in August as a “penalty” for India’s Russian oil and defence imports. For exporters, this has created an unprecedented challenge. Sectors like home textiles, carpets, and shrimp exports — which rely heavily on the US for up to 60% of their sales — fear sharp declines.

Industry bodies have warned of job losses running into lakhs. The Gem and Jewellery Export Promotion Council cautioned that the steep duties could disrupt supply chains and wipe out billions in trade, given that the US accounts for nearly a third of India’s jewellery exports. Textile exporters have demanded immediate government support, including cash assistance and loan moratoriums, to prevent large-scale unemployment.

Although pharma and electronics remain exempt, Trump has threatened to impose higher duties on those sectors too unless companies shift production to the US. Economists, including Nobel laureate Paul Krugman, have warned that tariffs are inflationary and could deepen stagflation in the US, but for India, the immediate concern remains falling exports and job losses in its most vulnerable industries.