U.S. Tariffs Hit Indian Exports: Textiles, Gems, Shrimp, and Leather Sectors Face Major Setback

Indian exporters are facing a severe blow as the United States has enforced a 50% tariff on a wide range of Indian goods, beginning August 27. The move, part of the Trump administration’s trade measures, is expected to impact key labour-intensive sectors including textiles, gems and jewellery, shrimp, leather and footwear, animal products, chemicals, and machinery.

The U.S. accounted for nearly 20% of India’s total goods exports worth $437.42 billion in 2024–25, making it India’s largest trading partner. Bilateral trade in goods during the period stood at $131.8 billion, with India exporting $86.5 billion to the U.S. Exporters warn that the sudden tariff escalation, imposed over and above the earlier 25% levy, threatens to disrupt this critical trade relationship and jeopardise millions of jobs.

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Export-Linked Sectors Face Heavy Tariff Burden

Industry stakeholders are calling the tariff move an “economic sanction.” A leather exporter noted that the burden would lead to factory closures and significant job cuts. Similarly, apparel exporters stressed that the textiles sector, with annual exports of $10.3 billion, is among the hardest hit. With the additional tariffs, Indian apparel now faces a 30–31% disadvantage compared to competitors such as Bangladesh, Vietnam, Sri Lanka, and Cambodia, making survival in the U.S. market nearly impossible.

The gems and jewellery industry has also raised an alarm. According to Kirit Bhansali, Chairman of the Gems and Jewellery Export Promotion Council (GJEPC), half of India’s polished diamond exports are destined for the U.S. The steep tariff increase risks bringing the sector to a halt, severely impacting artisans, manufacturers, and ancillary businesses across hubs such as Surat, Navsari, and Bhavnagar. Competing markets like Türkiye and Thailand now hold a distinct edge over Indian products.

Seafood exporters, particularly in Kolkata, warned that Indian shrimp will become “super expensive” in the U.S., especially when compared to Ecuador, which faces only a 15% tariff. With existing anti-dumping and countervailing duties already weighing on exports, the new tariff will drastically reduce competitiveness.

Exporters Seek Relief and Policy Support

Leather exporters also expressed concern over shrinking orders. Several U.S. buyers are reportedly demanding discounts of up to 20% to retain contracts. Many firms fear a 50% reduction in workforce due to loss of business.

According to think tank GTRI, the new tariffs will affect 66% of India’s exports to the U.S., underlining the scale of disruption. In response, the Federation of Indian Export Organisations (FIEO) has urged the government to announce urgent relief measures, including a one-year moratorium on loan repayments, collateral-free credit enhancements, and expansion of the Production-Linked Incentive (PLI) schemes. It also recommended aggressive trade diversification through free trade agreements with the EU, GCC, Africa, and Latin American countries.

Exporters emphasise that coordinated action between industry, trade bodies, and government is vital to safeguard livelihoods, sustain supply chains, and maintain India’s global competitiveness. Without timely interventions, they warn, India risks losing long-established ground in the U.S. market.

Conclusion

The steep U.S. tariffs pose a severe threat to India’s labour-intensive export sectors, risking jobs and global competitiveness. Exporters and industry bodies are urging swift policy action to mitigate losses. Coordinated efforts between the government and businesses will be vital to safeguard livelihoods and maintain India’s trade position.