US President’s Donald Trump’s 50% Tariffs on India is set to get to into effect from 27th August. Donald Trump had levied a 25 per cent tariff on India followed by an additional tariff of 25 per cent as punishment for buying crude oil from Russia. Trump’s 50% Tariffs on India is the highest rates on any of the US trading partners.
At the time of writing the news India is already facing an additional tariff rate of 25 per cent. The higher rate will apply to all Indian goods that “entered for consumption or withdrawn from warehouse for consumption” on or after this time. New Delhi marked this move of US as ‘unjust, unreasonable, and unfair’, while the Kremlin said nations deserve to choose their own trading partners. As per the United States of America, America has taken this move against India “Good Friend” of the USA as both the nations have failed to reach a final decision over the Free Trade Agreement which has stalled much to the frustration of Trump and other top US officials.
Indians are still doubtful about the sectors hardest hit by Trump’s 50% Tariffs. Let us discuss about the sectors in India which will be hardest by Trump’s tariffs:
Worst Affected Sectors by Trump’s 50% Tariffs
Global Trade Research Initiative (GTRI) suggests that labour-intensive sectors of India such as textiles, gems, and jewellery followed by leather goods, food, and automobiles, will be hit hardest after the Trump’s tariffs. The founder of the think tank, GTRI Ajay Srivastava suggest that exports in the affected sectors could collapse by 70 per cent, falling from $60.2 billion to $18.6 billion. He further warned that overall shipments to the US may also drop by 43 per cent, putting hundreds of thousand of jobs in India exports hubs at stake.
Let’s take a closer look at the hardest hit sectors
Textiles
Textiles except the readymade garments comprise around 26 per cent of India’s total exports. Washington is New Delhi’s largest market for textile and apparel exports with total approx. value reaching $10.3 billion (Rs 85,500 crore) every year. With the US imposing 50% tariffs textiles could be one of the worst-impacted sectors. As experts cited “Tariffs announcement by the US is a huge setback for India’s textile and apparel exporters.”
Gems and Jewellery
India exports 40 per cent of India’s global exports of Gems and Jewellery that stands at a whooping value of $10 billion to the US market. The US Tariffs will surge from 2.1 per cent to 52.1 per cent, which will further lead to job losses in Surat, Mumbai, and Jaipur. Polished Diamond segment, which is already under pressure from lab grown diamonds, may hit even harder due to imposed tariffs of 50% Tariffs.
Seafood
India exports Seafood to the US worth Rs 60,000 crore every year – mostly shrimp (worth Rs 20,000 crore). The tariff will hit the seafood exports hardest after the textiles sector and it will be reduced to Rs 24,000 crore. India’s shrimp will be now more expensive in the US market. With the US imposing the highest tariff rate on India, half a million shrimp workers in India will be directly affected, whereas two-and-a-half million more could be impacted indirectly.
Other sectors that will be affected by the US Tariffs of 50 per cent is Automobiles where those exporting gearbox and transmission parts to the United States will be massively impacted.
Pharmaceuticals
Pharma sector as of now has been excluded from the tariff, however the tariff has created a havoc among the industry as the US favour for its “Good Friend” may change any time.