Trump tariffs impact: What's going to get expensive after 50% imposition and who's going to pay for it?

Mint

3 days ago

United States President Donald Trump announced on August 6 a 25% additional tariff on India, effectively taking the total tariff to 50%. The move is likely to 'severely' impact domestic export sectors such as leather, chemicals, footwear, gems and jewellery, textiles and shrimp, PTI reported, citing industry experts.
The additional 25% tariff comes as a penalty for New Delhi's continued purchase of Russian oil, Donald Trump said. It will come into effect from August 27. At present, only China, India and Turkey have been hit with such 'punishment,' he added.
Meanwhile, the 25% duty, announced on July 31, will come into force from August 7 (9:30 am IST).
Donald Trump doubles tariffs on India
According to think tank GTRI, the new tariffs are expected to make Indian goods incredibly expensive in the US, 'with potential to cut US-bound exports by 40–50 per cent'.
Speaking to PTI, Yogesh Gupta, MD of Megaa Moda, a Kolkata-based seafood exporter, said that India's shrimp will now become expensive in the US market.
'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 this 25 per cent, the duty will be 33.26 per cent from August 7,' Gupta said.
The Confederation of Indian Textile Industry (CITI) said it is 'deeply concerned' about the potential adverse impact of the effective 50% US tariff rate for India.
'The US tariff announcement of August 6 is a huge setback for India's textile and apparel exporters as it has further complicated the challenging situation we were already grappling with and will significantly weaken our ability to compete effectively vis-à-vis many other countries for a larger share of the US market,' it said.
What products will see immediate impact from high prices?
For example, GTRI said that exports of organic chemicals to the US will attract an additional 54% duty.
Other big hit sectors, which will attract high duties include carpets (52.9%),
Apparel, knitted (63.9%), apparel — woven (60.3%),
Textiles, made-ups (59%),
Diamonds, gold and products (52.1%),
Machinery and mechanical appliances (51.3%),
Furniture, bedding, mattresses (52.3%).
Who will pay the price for tariff increase?
Colin Shah, MD, Kama Jewelry, said this move is a severe setback for Indian exports, with nearly 55% of India's shipments to the US market directly affected.
'The 50 per cent reciprocal tariff effectively imposes a cost burden, placing our exporters at a 30–35 per cent competitive disadvantage compared to peers from countries with lesser reciprocal tariffs,' he said.
'Many export orders have already been put on hold as buyers reassess sourcing decisions in light of higher landed costs. For a large number of MSME-led sectors, absorbing this sudden cost escalation is simply not viable. Margins are already thin, and this additional blow could force exporters to lose long-standing clients,' Shah added.
Which Indian sectors will suffer most from Donald Trump's tariffs?
In 2024-25, the bilateral trade between India and the US stood at $131.8 billion ($86.5 billion exports and $45.3 billion imports).
The sectors, which would bear the brunt of 50% tariff charges, are: