US Slaps 50% Tariff on Indian Goods, $48.2 Bn Exports at Risk

India’s exports to the United States are set to take a sharp hit as Washington’s new 50% tariff on Indian products came into effect on Wednesday, threatening nearly $48.2 billion worth of trade.

The move follows President Donald Trump’s executive order earlier this month, which doubled the earlier 25% duty after citing India’s continued imports of Russian oil. The decision has cast a shadow over India-US trade relations and sparked concerns across labour-intensive sectors.

According to the Global Trade Research Initiative, industries most at risk include textiles, leather goods, gems and jewellery, food products, and automobiles sectors that employ millions. Reuters also flagged potential ripple effects across capital goods, pharmaceuticals, chemicals, oil and gas, and smartphones.

Ajay Srivastava, founder of the think tank, described the tariff hike as “a strategic shock that threatens to wipe out India’s long-established presence in the US market, causing unemployment in export-driven hubs and weakening its role in the industrial value chain.”

Exporters have voiced alarm over the move. Agra-based leather footwear exporter Puran Dawar called it “an absolute shock,” warning that small businesses could collapse unless new markets open up. “Unless domestic demand rises or other regions absorb exports, industries like ours will suffer badly,” he said, adding that US consumers could also face higher prices.

Ajay Sahai, director general of the Federation of Indian Export Organisations, echoed the concern, noting that “some product lines could become unviable overnight, particularly for SMEs dependent on the US.”

The government is taking measures to limit the adverse effects of a potential fallout. According to Prime Minister Narendra Modi, farmers, small businesses, and the dairy sector would remain priority areas in promising ways for protection against US trade pressure. Officials are considering a range of measures, such as export incentives, concessional loans, and plans to enhance domestic consumption ahead of Diwali.

Meanwhile, India has begun scouting opportunities for economically diversifying markets beyond those in Latin America and Africa and Southeast Asia. On top of that, it is expected that trade negotiations with the European Union will really pick up momentum as India goes about disentangling its dependence on the US.