U.S. President Donald Trump has intensified his tariff offensive, announcing a sweeping 50% duty on a broad range of Indian exports, in what he framed as a penalty for New Delhi’s continued imports of Russian oil. But this move is more than a geopolitical signal—it’s a potentially transformative disruption for the $132 billion India–U.S. bilateral trade relationship.
According to the Global Trade Research Initiative (GTRI), the new tariffs could reduce Indian exports to the U.S. by up to 40–50%, with micro, small and medium enterprises (MSMEs) bearing the brunt.
“The tariffs are expected to make Indian goods far costlier in the U.S., severely impacting competitiveness,”GTRI said in its analysis.
Sector-wise tariff impact on Indian exports to the U.S. under Trump’s new 50% duty regime. Source of information: GTRI analysis
Here is the sector-wise bar chart showing the new total U.S. tariffs on Indian goods (effective August 28, 2025). Each bar is color-coded by the impact level on India:
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🔴 Dark Red = Very High Impact
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🟠 Orange = High Impact
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🟢 Green = Low Impact
This chart clearly outlines the product categories most affected—ranging from textiles and apparel to diamonds, machinery, and shrimp—and shows the total tariff burden they now face, in many cases exceeding 50%.
Which Sectors Are Most at Risk?
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Apparel and Textiles: The Confederation of Indian Textile Industry (CITI) expressed grave concern over the tariffs on knitted (63.9%) and woven (60.3%) apparel, saying the blow comes when the industry is already battling global headwinds.
“This will significantly weaken our ability to compete in the U.S. market,” CITI warned.
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Gems and Jewellery: Colin Shah of Kama Jewelry noted that 55% of India’s jewellery exports are U.S.-bound. The new duties, he said, would erode India’s pricing edge by 30–35% and are already causing buyers to pause orders.
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Seafood: Indian shrimp exporters, already struggling with anti-dumping and countervailing duties totaling 8.26%, will now face over 33% tariff, said Yogesh Gupta, MD of Megaa Moda.
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Machinery & Chemicals: With organic chemicals now attracting 54% duty, and machinery close behind at 51.3%, large-volume industrial exports may suffer significant setbacks.
Winners, Losers, and the Bigger Trade Picture
Some sectors, such as pharmaceuticals and smartphones, are currently insulated—either due to zero tariffs or supply chain alignment with U.S. partners. But for many MSMEs in textiles, chemicals, and leather, the tariff escalation may render long-standing export relationships unsustainable.
“Margins are already thin. This additional blow could force exporters to lose long-term clients,” Shah warned.
Geopolitics, Realpolitik, and Trade
Trump’s decision comes in the wake of New Delhi’s refusal to curb Russian oil purchases. Curiously, while China and Turkey continue similar trade practices, only India has been targeted. This selective penalty not only exposes geopolitical calculations but also signals a shift in the rules-based trade order.
Indian exporters, meanwhile, are urging the government to accelerate the India-U.S. Bilateral Trade Agreement (BTA) to counteract the impact. However, officials remain firm that there will be no compromise on core concerns, especially in areas like agriculture, dairy, and genetically modified products.
The Age of Weaponised Tariffs Is Here
What we’re witnessing isn’t just a tariff hike—it’s the use of trade policy as an extension of foreign policy. In this emerging world of “weaponised interdependence,” countries like India face a dual challenge: protect sovereignty in foreign relations while navigating economic survival in hostile trade waters.
The outcome of the India–U.S. trade talks will now serve as a litmus test: can diplomacy de-escalate tariff warfare, or are we headed toward a future where access to markets is dictated not by efficiency, but by alignment?
