Harsh Harvest: The US Tariff Toll On Indian Farms

In Bastali, a lush rice-growing village in Haryana’s Karnal district, Tejvir Singh’s days still begin like they always have—with a walk through his rice fields, feeding his buffaloes and watching the sky for signs of rain. But lately, Singh finds himself listening to global news more than weather forecasts. That’s what everyone around him also wants to discuss these days.

It is not that the farmers of Bastali are especially keen on international affairs, but they believe their livelihood might soon depend on what US President Donald Trump tweets, what Russian President Vladimir Putin concedes, what Ursula von der Leyen, the President of the European Commission, promises in a press conference—and what India does about them all.

“It’s like being dragged into someone else’s war,” says Tejvir Singh. “Only now, it’s being fought over our rice, oilseeds, soyabean and milk.”

Farmers, dairyists and small businesses in India are caught up in a web of tariff threats from the world’s biggest economy—the United States. Dragged into this, farmers are suddenly forced to ponder over defence deals, nuclear tech swaps and unstable global diplomacy. They are now acutely aware that their fate depends on more than just the monsoon, or mandi prices. It is tied to secondary sanctions, strategic posturing and the whims of political strongmen. That uncertainty has everyone on edge, for jobs are at stake—46 per cent of India still directly depends on agriculture for its livelihood—and consumers may soon be pitted against growers. Whenever there’s talk about imports of edible items, especially farm-based goods, it is a chilling prospect in a country where workers, farmers and consumers often belong to the same family.

Most Indian farms barely break even after each season. Hence, the prospect of heavily subsidised imports from the US, where only one per cent of the population depends on agriculture, has sparked sleepless nights for many.

Tejvir Singh warns, “Yeh jo Amreeka karna chaah raha hai, agar ho jaata hai toh Bharat ka kisan khatam ho jaayega,”. The fear is legitimate: American agricultural and dairy products can flood the Indian market at prices local farmers and dairy farmers can never match. “The Indian consumer may benefit for a short while from the lower prices, but then the prices will climb once Indian farms are ruined,” Singh adds.

He’s not the only one who is anxious. Across Punjab, dairy farmers are on edge. Daljit Singh Gill of the Punjab Dairy Farmers’ Association (PDFA) says the India’s dairy sector, built painstakingly over decades, could be wiped out. “We’re barely breaking even as it is,” he shares. “The industry is becoming cost-intensive due to cold chain demands and mechanisation. If cheaper American milk powder or other dairy products are allowed into India, nothing will survive—not just in Punjab, but across the nation.”

When Trump first threatened tariff hikes during his previous presidential term, the tremors were felt far beyond Washington. From dairy cooperatives in Gujarat to basmati rice-growers in Punjab, the Indian agricultural sector displayed its resentment of any changes in the trade structure. Now, during Trump’s second term, those tremors have become shockwaves—especially for small and mid-size producers in India.

The United States has always wanted a bigger share of India’s huge market for its cereals, pulses and oilseeds, often hoping to export under the guise of “market liberalisation”. But behind the jargon lies a harsh reality as Professor Biswajit Dhar points out. “Imports from the United States will pit the small Indian farmer against product giants of America,” he says.

Conditions on most Indian farms have worsened. The average farm size has slipped from 2.3 to 1.1 hectares over the last 55 years, and incomes of farmers haven’t kept pace with rising input costs. Meanwhile the growth rate of agriculture has hovered around 2-4 per cent. “And that could become our undoing—the lack of attention paid to domestic farming,” Dhar warns.

Development economist Dr Santosh Mehrotra views Trump’s latest manoeuvres through a broader lens. “Trump thinks he is attacking Russia,” Mehrotra says. “He promised to end the Russia-Ukraine war, which he couldn’t, and he now hopes India will push Putin in that direction...Trump doesn’t know it yet, but we are tough cookies, and will push back on agricultural imports.” He points out that this is what has happened in India’s talks with the US. The Indian negotiators walked out, not willing to relent on agriculture.

Mehrotra argues that Trump’s moves—from secondary sanctions on India and China to tariff pressures and even his meeting with Putin in Alaska—show just how desperate he is not to lose support among his MAGA base. India finds itself a reluctant pawn in this scenario, but it is not without options. “Trump may think Modi will buckle,” Mehrotra says. “But Modi’s foreign policy is also his electoral policy, so he won’t take that risk. Besides, if the US wants to sell almonds here—fine. Some three per cent of Indians eat them. But American milk powder in India? Ratti-bhar chance nahi hai.”

India’s basmati rice exports—particularly from Punjab and western Uttar Pradesh—are already under pressure from the tariffs imposed by the US. “If Pakistan has a 19 per cent tariff and we’re at 25 per cent plus another 25 per cent, that’s not sustainable,” says development economist Dr K.P. Kannan. “Importers will switch for even a one per cent difference, and we were facing way above that even before the latest round of tariffs was discussed.”

Dr Kannan adds, “Our trade could be hit by $20-30 billion, and India may be forced to move away from the United States market.” He says India’s independent foreign policy stance has always troubled American administrations. It’s just showing up in a new form—tariffs.

The dairy industry faces similar vulnerabilities. The US, with its massive surplus and deep subsidies, sees India’s vast consumption base as an untapped opportunity. As Dr Kannan notes, India’s model—built on cooperatives and local ecosystems—cannot survive that onslaught without decisive assistance from the State.

After all, it is not just rural India that is impacted. The textile sector, dominated by women and small units, faces global buyer shifts to Vietnam and Malaysia. The troubles in Bangladesh, however, may soften the blow to an extent.

Labour mobility is being stifled by Trump’s repeated crackdowns on immigration, even on student and work visas for Indians who are keen to study or work in the United States. His repeated statements about stricter scrutiny of student visa applicants are being seen as a warning/threat to the services sector. Even India’s generic pharma exports may soon be affected, if Trump’s statement that the US will catch up on pharma manufacturing is made good.

Mehrotra strikes a note of guarded realism. “Forty per cent of India’s global exports are services. Eighty-five per cent are non-agricultural goods. This tariff won’t destroy our economy, but the pressure on the government to not buckle must remain,” he says. “Farmers and dairyists should keep up their promises to agitate, if required. That must hang over the government, but mark my words, kuchch nahi hoga, nothing will happen.”

Behind the confidence lies another message: India must negotiate smarter. Mehrotra suggests shifting focus: “Why not demand that the United States import our telemedicine services, or recognise our medical degrees? We should play the same game as others—promise to invest in the United States, just like Japan and the European Union. Nothing will materialise before Trump’s term ends anyway.”

What makes this moment particularly volatile is not just economics but also ego. Symbolic slights have hardened into strategic standoffs. Meanwhile, institutions like the World Trade Organisation are reduced to ceremonial actors.

Dr Ritu Dewan, Conference President of the Indian Society of Labour Economics and a visiting professor at the Institute of Human Development, highlights a neglected aspect of Indian agriculture: the critical role, and vulnerability, of women farmers. “Trading in grains is a male-dominated space, but women still produce 80 per cent of the food in India,” she says. But women are losing ground in the workforce, and with wage disparities deepening, it will especially marginalise women farmers.

Dewan also points to significant gaps in data. “India had enough time to prepare for the ‘Trump tariffs’. But it’s tough to prepare when there’s been no recent livestock census, no micro/small industry census, no agriculture census, no population census,” she says, adding that most women-led MSMEs are necessity-driven and yet in decline. Lack of policy capacity and conscious neglect have made Indian farmers—including the women—especially vulnerable to global challenges. “It is not as if the small industry can do well without agri-linkages, or vice versa,” she explains.

Not all is bleak though. Indian exporters have room to explore third-country routes to soften tariff impacts. Services and chip design services in India continue to grow, and it is unlikely that the US will push Indian workers out beyond a point. After all, some services India provides are essential for the American economy, and come at a vast price advantage. “America cannot really do away with an Indian workforce supporting its businesses—at least remotely, from India, if not stationed in the United States,” says Dr Kannan.

There is also talk of India rethinking its development priorities—away from a narrow export-driven model, towards domestic demand and job creation.

Dr Arun Kumar, retired professor of Economics at Jawaharlal Nehru University and an expert on public policy warns, however, that the window is small. “We have been cutting allocations to labour-intensive sectors while we boosted highways and hi-tech in successive Budgets,” he says. “We have deprioritised rural employment generation, health and education. These are the sectors that create jobs and build resilience—we can still do these things, starting with boosting MGNREGA, expanding it to urban areas, and focusing on human development, especially in rural areas where there’s massive unmet demand for services.”

Whether this moment becomes a full-blown crisis or a pivot to self-reliance depends on political will—and the late-August deadline Trump has set for the punitive 25 per cent tariff to kick in. To pre-empt job losses, India must consider temporary income support for farmers, investment in rural infrastructure, stronger negotiating leverage—all these should be on the table, economists says.

Besides, memories of the farm laws protests still haunt Delhi. Prime Minister Narendra Modi withdrew those laws after tremendous pressure from the farmers of the northern states—Punjab, Haryana and Uttar Pradesh. So on August 7, 2025, at M.S. Swaminathan’s centenary, Modi drew a red line: India will “never compromise” on the interests of farmers, herders or fisherfolk. “Dairy farmers were getting ready to protest against pressure from the US to open up the market, but now that they have the prime minister’s assurance, they are standing back,” says Gill. Whether that promise survives Washington’s tariff fire will decide if Bastali’s fields—and lakhs more like them—will stay insulated from the churns of global geopolitics and economics.

Pragya Singh is Senior Assistant Editor, Outlook. She is based in Delhi

This September 1, 2025, issue 'The Tariff Weapon’ of Outlook Magazine arrives at a critical moment in India’s economic story, with President Donald Trump announcing that tariffs on Indian exports to the United States will rise to 50 per cent. It appeared in print as 'The Harsh Harvest'