The United States has imposed a significant 50% tariff hike on key Indian exports, affecting sectors like textiles, gems and jewellery, chemicals, and seafood. This action comes as a response to India’s continued oil trade with Russia, leading to concerns over revenue losses and trade relations.
Why Did the US Impose the 50% Tariff?
The US decision to raise tariffs by 25% on top of the existing 25% is a result of India’s refusal to stop oil imports from Russia amidst geopolitical tensions. This move has singled out India, drawing criticism for selective actions compared to other countries like China and Turkey.
Key Export Sectors to Be Hit the Hardest
- Textiles and Apparel:
- Exports worth $10.3 billion to the US.
- Expected tariffs of nearly 60-64% on garments.
- Concern expressed by the Confederation of Indian Textile Industry (CITI).
- Gems and Jewellery:
- Top exports worth $12 billion.
- Facing around 52% duty, impacting cost competitiveness.
- Chemicals and Organic Products:
- Organic chemical exports to face 54% tariffs.
- Affects trade worth approximately $2.34 billion.
Reactions from Industry and Experts
- Federation of Indian Export Organisations (FIEO): President S C Ralhan termed the decision a “severe setback”, affecting 55% of Indian shipments to the US. He warned of potential order cancellations and client losses.
- Global Trade Research Initiative (GTRI): Founder Ajay Srivastava advised against abandoning Russian oil solely to please the US. He suggested calm diplomacy and strengthening ties with other global players.
India-US Bilateral Trade Snapshot
- Total Trade (2024-25): $131.8 billion
- Indian Exports: $86.5 billion
- US Imports to India: $45.3 billion
What Lies Ahead?
The immediate future for Indian exporters appears challenging due to high tariffs, especially impacting MSMEs. Diplomatic resolution is crucial to prevent further market share loss in the US. However, this scenario also presents an opportunity for India to explore new export markets and strategic trade alignments.
Key Takeaways for Competitive Exams:
- The US has imposed a 50% tariff hike on Indian exports, affecting key sectors like textiles, gems and jewellery, chemicals, and seafood.
- India’s refusal to halt oil imports from Russia led to the tariff increase, causing concerns over revenue losses and trade relations.
- Industry leaders and experts advise calm diplomacy and diversification of export markets to mitigate the impact of high tariffs.
