Trump Tariffs: Indian Exports Face Toughest US Trade Penalty In Years As Tariffs Soar

The US Department of Homeland Security on Tuesday formally notified India of its decision to raise tariffs on Indian goods to as high as 50 percent, underscoring Washington’s resolve to proceed with the measure after efforts to advance a Russia–Ukraine ceasefire appeared to stall. According to the notice, any Indian goods cleared for consumption, or withdrawn from bonded warehouses, from 12:01 am EDT today will be subject to the higher levies.

The surcharge, which is imposed over and above existing duties, marks one of the most stringent trade actions against Indian exports in recent years. Though key sectors such as pharmaceuticals and certain electronic products have been spared, industry groups warn of severe disruption across traditional labour-intensive export categories.

Gems And Jewellery

Diamonds, jewellery and related items — India’s largest export to the US — are among the hardest hit. Effective duties in this category will rise to nearly 50 percent. Exporters warn of immediate order cancellations, particularly in Surat’s cutting and polishing hubs, with smaller units most at risk of closure.

According to traders, nine out of ten diamonds exported to America are from India, specifically from Surat. According to the US International Trade Commission, in 2024, India exported $11.58 billion worth of gems and jewellery to the US, while total bilateral trade in gems was $16.89 billion. From India, exports of cut and polished diamonds to the US amounted to $5,601.24 million in FY 2023-24; in 2022-23 this figure was $7,972.16 million. Lab-grown (artificial) diamonds are also exported: in FY 2023-24 exports were valued at $831.45 million, compared to $1,088.65 million in 2022–23.

Textiles, Apparel And Automobiles

Garments and home textiles will attract the additional 25 percentage points. The US, a top market for Indian apparel, is expected to see brands divert orders to Bangladesh and Vietnam. Exporters operating on thin margins anticipate job cuts and idle capacity in India’s textile belts.

While some passenger vehicle parts may face softer treatment, heavy vehicle components and certain engineered parts fall fully under the new duty. Analysts say American assemblers could shift sourcing, hurting smaller suppliers in India who depend heavily on the US market.

Chemicals

Organic and specialty chemicals are included in the tariff list. Commodity chemical exporters are expected to lose ground to competitors in China and Southeast Asia. For high-value intermediates, margins may be partially protected, but volumes are likely to shrink.

Farming

Farmers, dairyists and small businesses in India are caught up in a web of tariff threats. Dragged into this, farmers are suddenly forced to ponder over defense 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. India’s basmati exports already under pressure from the tariffs imposed by the US.

Seafood, Leather And Footwear

Frozen shrimp and other marine products, a growing export line to the US, will now face 25 percentage points higher tariffs. With American buyers highly price-sensitive, Indian seafood exporters fear major demand drops and income losses for coastal communities.

Leather goods and footwear exports to the US will also become significantly costlier. Industry representatives say smaller producers will be unable to absorb the price hike, leading to cancelled orders and liquidity stress.

India’s shrimp industry is a pyramid. At the peak sit the exporters and processing companies with direct links to overseas buyers. Below them are pond owners, contractors, feed suppliers and traders. Gujarat’s farmers in Valsad and Surat face slashed prices, while Kerala’s peeling sheds—depending on raw shrimp from Andhra and Tamil Nadu—have gone eerily quiet. The roots of the crisis lie in India’s dangerous dependence on the US. Over 35 per cent of Indian shrimp exports head there, making up nearly half of the country’s seafood export earnings.

Engineering Goods And Metals

Basic metal products and engineering components are set to see effective duties of up to 50 percent. While highly specialized equipment may remain competitive, commoditised exports are expected to lose out quickly to cheaper suppliers elsewhere.

Furniture And Handicrafts

Exports of home décor, furniture and handicrafts — largely produced by artisan clusters and MSMEs — will also come under the higher duty slab. Retailers in the US are likely to shift orders, leaving Indian exporters with excess stock.

For instance, orders from the US have dried up for Kashmir’s handicrafts sector after Trump announced a 50 per cent tariff on Indian exports. Business scenario remained grim even before the actual tariff hike, as US importers have been anticipating a change in the tax structure.

The business of handicrafts items like hand-carved souvenirs, carpets and papier-mâché artefacts is the worst affected.

Macroeconomic Impact

India exported goods worth nearly 80–87 billion dollars to the US in 2024. Reports estimate that 40–55 percent of this trade could be directly affected.

The Indian government is weighing support measures for affected exporters, including duty drawback extensions and export incentives. New Delhi is also expected to raise the issue at the WTO and through diplomatic channels. Exporters, meanwhile, are exploring re-routing shipments to Europe, the Middle East and Asia.