US tariffs of 25% on Indian goods went into force earlier this month, but President Trump has since announced plans to double the rate, citing New Delhi’s purchase of Russian oil—purchases the White House argues are indirectly funding Russia’s war against Ukraine.
According to the US Trade Representative, Indian exports to the US in 2024 totaled $87.3 billion. Roughly 30% of those exports—about $27.6 billion worth of pharmaceuticals, electronics, raw drug materials, and refined fuels—remain duty-free. Hopes for a trade deal capping tariffs at 15% were dashed after India refused to open its agriculture market to American farm goods, citing fears of devastating the country’s small farmers.
Industries Under Pressure
The impact on Indian industries has been severe. Tiruppur’s garment factories, suppliers to major US retailers such as Target, GAP, and Zara, are reeling. In Mumbai, jewelry exporters face uncertainty, while Surat—the world’s diamond cutting and polishing capital—has been badly hit. Many factories that once sustained nearly five million livelihoods are now operating only 15 days a month.
Millions of workers depend directly or indirectly on these export industries. In Tiruppur alone, more than 600,000 workers are employed in garment manufacturing. In Surat, entire neighborhoods survive on diamond polishing wages. Along India’s coastal belt, shrimp farming supports vast networks of small-scale farmers and laborers. Now, all of these livelihoods are under threat.
Government and Policy Response
The Indian government has suspended import duties on raw materials for key industries, hoping to reduce input costs. It has also accelerated trade negotiations with the UK and Australia to open new markets for Indian goods. Yet these efforts are unlikely to deliver immediate relief.
For Indian policymakers, this is a sobering reminder of how quickly trade can become entangled with geopolitics. The tariffs are not just an economic tool; they are a diplomatic signal.
A Watershed Moment
Generations of Indian workers have been trained for global supply chains that now threaten to bypass the country altogether. “We built our lives on American orders,” one Tiruppur factory owner says. “If those vanish, what will we have left?”
India’s export sectors are facing a watershed moment. The tariffs have exposed long-ignored vulnerabilities: overdependence on a few markets, weak labor protections, and the absence of a robust domestic safety net. Whether India can turn this crisis into an opportunity—by diversifying markets, strengthening trade partnerships, and investing in its workforce—remains to be seen.
For now, Tiruppur’s silent factories, Surat’s half-empty workshops, and the uncertain waters of India’s shrimp farms are stark reminders of what is at stake.
Lessons for India
In the words circulating among Indian business leaders: “Increase self-reliance, diversify, and leave no stone unturned.”
US trade coercion has brought Indian exports to their knees—something New Delhi did not anticipate. India had long believed that Washington depended heavily on it as part of its strategy to constrain China. Policymakers played that card skillfully: Russia remained an all-weather friend while the US was a major trade partner, with more than $87.3 billion in annual commerce.
Now, however, India must absorb the lessons of this moment. The ball is in New Delhi’s court: will it seize the opportunity to reset its trade strategy, or risk being trapped in a crisis of its own making?
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