US President Donald Trump’s announcement of a 50% US tariff on Indian exports has sent shockwaves through India’s export sector. Industries like textiles, diamonds and seafood, which employ millions, are facing a major downturn. Exporters are worried about how to pay wages, keep machinery running and maintain their global competitiveness.
The tax is not just about trade. It is about jobs, wages and the survival of India’s traditional export hubs.
Textile industry takes the first hit
Tiruppur in Tamil Nadu, India’s textile capital, has been hit the hardest. The industry, known for supplying clothes to global brands like Walmart, Target and Zara, is staring at an empty order book.
Impact on textile exports
| Factor | Before Tariff | After 50% Tariff | Competitor Price |
|---|---|---|---|
| Shirt price (India) | $10 | $16.4 | |
| Shirt price (China) | – | – | $14.2 |
| Shirt price (Bangladesh) | – | – | $13.2 |
| Shirt price (Vietnam) | – | – | $12.0 |
Indian exporters now find themselves more expensive than their competitors, forcing American buyers to shift orders overseas.
Diamonds and jewellery under pressure
Mumbai and Surat, the hubs of India’s diamond polishing and jewellery trade, are also bracing for the heat.
- India exports over $10 billion worth of gems and jewellery to the US every year.
- Even a 10% tariff hike could erode profit margins, as most exporters survive on just 3-4% margins.
- Already, several diamond units in Surat are reducing working hours and sending workers on paid leave.
This is not just a business issue it is a job crisis for the nearly 5 million workers who depend on the sector.
Shrimp farmers and seafood exporters hit
Shrimp exports, one of India’s fastest-growing industries, are also at risk.
- India is the largest shrimp exporter to the US.
- Combined with taxes and duties, shrimp now face a 60% import duty.
- Prices have already fallen by $0.60-$0.72 per kg, reducing farmers’ incomes.
Nearly 3 million farmers and workers could be affected as demand in the US falls.
The broader economic impact
The timing of this tax shock is particularly harsh:
- Exporters rely heavily on Christmas and holiday orders, but they are now facing cancellations.
- Lockdowns in the textile, jewellery and shrimp sectors could further exacerbate India’s already high unemployment.
- Small and medium exporters that have borrowed to expand now face bankruptcy.
Government response
The Indian government has tried to cushion the blow:
- Reduced import duties on raw materials.
- Fast-tracked talks with the UK, EU and Australia for alternative markets.
- Promoted domestic sales during festivals like Diwali.
But trade experts warn that these measures may be too little, too late.
The future of India-US trade
The tariffs are not just economic – they carry a political message. US officials accuse India of being too close to Russia and China. This has added a geopolitical layer to the trade war.
Experts say that Indian exporters should:
- Diversify markets beyond the US.
- Focus on growing domestic demand.
- Invest in efficiency to reduce costs.
Trump’s tariff shock has exposed the vulnerabilities of India’s export-dependent industries. From the idle textile mills of Tiruppur to the half-empty diamond workshops of Surat, the crisis is real.
Unless India finds new markets and strengthens domestic demand, the tariff war could turn into a jobs war for millions of Indian workers.
