from-garments-to-leather-exports-sectors-hit-hardest-by-tariffs

The doubling of tariffs by the US administration on Indian products has rattled the country’s export business and escalated tensions between the two massive economics.

 

The punitive 25 per cent tariffs imposed on top of the existing 25 per cent that were already in place, have been attributed by US President Donald Trump to India’s purchases of Russian oil, which he says has been an indirect source of funds for Russia’s war in Ukraine. 

 

By singing a draft order on Tuesday, Trump sealed the levy of 50 per cent duties – one of the highest imposed on any country, the only other two being China and Brazil – affecting Indian products such as garments, gems and jewellery, footwear, sporting goods, furniture, and chemicals. 

The worst-hit among exports worth more than $48 billion will be include textiles/ clothing, gems and jewellery, shrimp, leather and footwear, animal products, chemicals, and electrical and mechanical machinery.

 

Also Read: India braces as Trump tariffs double to 50 pc today

Only sectors such as pharma, energy products and electronic goods are out of the ambit of these sweeping duties, while steel, aluminum and derivative products, passenger vehicles, copper and other goods are subject to separate tariffs of up to 50 per cent under the Section 232 national security trade law.

The US has been the largest trading partner of India, with the two countries’ trade totaling $129 billion in 2024, according to the US Census Bureau data. The US’s trade deficit stood at $45.8 billion.

 

India’s trade ministry officials peg the average tariff on US imports by India at around 7.5 per cent; while the US Trade Representative's office has highlighted rates of up to 100 per cent on autos and an average applied tariff rate of 39 per cent on US farm goods.

Garment industry

 

The domestic readymade garment (RMG) industry is heavily dependent on exports since labour here is cheaper, as in most South Asian and South East Asian countries. Anticipating the effects of the tariffs, many exporting units in Tamil Nadu and other places have already halted production to see how demand gets affected. 

Experts expect the revenue growth of the industry to slow to 3-5 per cent this fiscal, although the tariffs will impact some firms more than others. 

The Confederation of Indian Textile Industry (CITI) called the US tariff announcement a “setback” for India’s textile and garment industry, further crippling an industry that was grappling with domestic challenges of scouring raw materials at cheaper rates. The tariffs make competition with other countries such as Bangladesh and Vietnam much stiffer, the body said.

Seafood exports

 

India’s seafood exports, especially that of shrimp, will undoubtedly be delivered a major blow as the tariffs take effect.
According to trade estimates, the move will impact at least ₹45,000 crore worth of Indian exports, with Bengal among the "hardest-hit" states as it accounts for 12 per cent of India’s seafood exports, dominated mostly by prawn varieties cultivated in North and South 24-Parganas and Purba Medinipur district.

The state’s labour-intensive leather, engineering and marine sectors have, in fact, put production “on hold” say exporters, as they brace for geopolitical headwinds that are intensified by the US tariffs.

“Labour-intensive industries are under severe pressure. In marine exports, the maximum of Bengal’s annual shipments may collapse," said Yogesh Gupta, regional chairman (east), of the Federation of Indian Export Organisations (FIEO) and a leading marine exporter.

“We are already facing huge competition from Ecuador as it has only 15 per cent tariff. Indian shrimp already attracts a 2.49 per cent anti-dumping duty and a 5.77 per cent countervailing duty. After the additional 25 per cent, the duty will be 33.26 per cent from August 7,” Gupta said.

Of the current total exports of ₹8,000 crore to the US from West Bengal, marine shipments worth at least ₹5,000-6,000 crore from the state are on direct hit, states Rajarshi Banerji, chairman, Seafoods Exporters Association of India (East).

Gupta also warned that around 7,000-10,000 jobs in processing units, and many more at the farm level, are at risk as states like Andhra Pradesh will begin to compete with Bengal in non-US markets.

Leather industry

With the US being amongst its largest buyers, the labour-intensive leather industry will face the brunt of the increased levies.

Not only does West Bengal account for nearly half of India’s leather exports, valued at ₹5,000-6,000 crore annually, Kolkata is one of India’s largest leather goods hub, housing 538 tanneries, 230 footwear units, and 436 leather goods facilities.

“Bantala leather hub, near Kolkata, alone employs five lakh people. Only India and Brazil face a 50 per cent tariff, while Southeast Asia enjoys a much lower 19-20 per cent rate, which will kill Indian exports to the US,” said Md Azar, senior vice-president of the Indian Leather Products Association.

Industry officials warn that European markets should be prepared to face the heat of the tariffs too, as Kolkata-made goods often make their way to Europe before being shipped to the US.

Exporters are now working their way through loopholes, such as partially producing products in Europe to obtain a “Made in Europe” tag for entry into the American market.

Footwear industry

 

The footwear category is expected to be hit the hardest, as it represents 40 per cent of global leather exports. 
In FY'25 alone, India’s leather footwear shipments to the US were close to USD 500 million, the industry stakeholders said.

Jewels and gems industry

 

Another labour-intensive industry, the jewellery sector has long been sounding alarm bells over Trump’s tariffs, saying at least 1 lakh jobs could be axed, particularly in Surat, Mumbai, and Jaipur.

The Surat Diamond Bourse has already started experiencing a two-decade low in export demand, and some exporters are even considering relocating to Botswana or Europe where tariffs are lower. 

 

"The US is our largest market, and exports during April-July 2025, had already declined 32 per cent year-on-year to USD 2.12 billion. With the new tariff in place from August 27, we fear exports to the US could fall by over 75 per cent, impacting polished diamonds, jewellery, and coloured gemstones alike," said Kirit Bhansali, Gem & Jewellery Export Promotion Council (GJEPC) Chairman.

The gems and jewellery exports to the US touched nearly USD 10 billion in 2023-24, according GJEPC data. 

 

"We urge the government to step in with urgent support measures such as a targeted 'duty drawback' or reimbursement scheme, relief on working capital, and permission for reverse job work and limited domestic tariff area (DTA) sales in SEZs," Bhansali added.

The abrupt tariff escalation is not just an export concern, it's a macroeconomic jolt,said  GJC Vice Chairman, Avinash Gupta. "The pressure on the rupee and rising gold prices will ripple through domestic markets, dampening consumer sentiment and squeezing small retailers. We're staring at a dual crisis: weakened global competitiveness and shrinking local demand. The government must urgently recalibrate its trade strategy to shield this vital sector," he added.

"Previously, when there was a 10 per cent tariff, around 50 thousand people were suspected to be unemployed. If the same pattern follows with the new tariff hike, more than one lakh people could be impacted this time. It's not merely a trade restriction, it's a direct blow to the heart of India's artisanal legacy. This tariff threatens to erode decades of trust and trade relations built painstakingly with American buyers," said Rajesh Rokde, Chairman of the All India Gem and Jewellery Domestic Council.

Engineering goods

In the engineering goods sector, almost 50,000-1 lakh jobs in the foundry-related industry of West Bengal that are linked to this trade are in danger, says Rakesh Shah, former chairman and leading casting exporter of Engineering Export Promotion Council (EEPC).

Shah said the US alone accounts for about USD 20-21 billion of India’s engineering exports, of which nearly USD 1 billion go from West Bengal.

What’s next

India’s Commerce Ministry plans to hold meetings with exporters from various sectors in the new few days to find out ways to boost trade with other countries to cushion the impact of US tariffs on exports.

A government official said work is progressing fast on the formulation of the Export Promotion Mission, which was announced in the Budget for 2025-26.

"In the next 2-3 days, the ministry will meet stakeholders on the diversification of exports," the official added.

Meanwhile, a US Customs and Border Protection notice to shippers provides a three-week exemption for Indian goods that were loaded onto a vessel and in transit to the US before the midnight deadline. These goods can still enter the US at prior lower tariff rates before 12:01 a.m. EDT (0401 GMT) on September 17.