India Reels From US Tariff Hike Threat
Many warn of dire job losses after Trump said he would double new import tariffs from 25 percent to 50 percent if India continues to buy Russian oil, in a bid to strip Moscow of revenue for its military offensive in Ukraine.
"At 50 percent tariff, no product from India can stand any competitive edge," said economist Garima Kapoor from Elara Securities.
India, one of the world's largest crude oil importers, has until August 27 to find alternatives to replace around a third of its current oil supply from abroad.
While New Delhi is not an export powerhouse, it shipped goods worth about $87 billion to the United States in 2024.
That 50 percent levy now threatens to upend low-margin, labour-intensive industries ranging from gems and jewellery to textiles and seafood.
The Global Trade Research Initiative estimates a potential 60 percent drop in US sales in 2025 in sectors such as garments.
Exporters say they are racing to fulfil orders before the deadline.
"Whatever we can ship before August 27, we are shipping," said Vijay Kumar Agarwal, chairman of Creative Group. The Mumbai-based textile and garment exporter has a nearly 80 percent exposure to the US market.
But Agarwal warned that is merely triage.
Shipping goods before the deadline "doesn't solve" the problem, he said.
"If it doesn't get resolved, there will be chaos," he said, adding that he's worried for the future of his 15,000 to 16,000 employees.
"It is a very gloomy situation... it will be an immense loss of business."
Talks to resolve the matter hinge on geopolitics, far from the reach of business.
Trump is set to meet Vladimir Putin on Friday, the first face-to-face meeting between the two countries' presidents since Russia launched its full-scale invasion of Ukraine in February 2022.
New Delhi, with longstanding ties with Moscow, is in a delicate situation.
Since Trump's tariff threats, Prime Minister Narendra Modi has spoken to both Putin and Ukrainian President Volodymyr Zelensky, urging a "peaceful resolution" to the conflict.
Meanwhile, the US tariff impact is already being felt in India.
Businesses say fresh orders from some US buyers have begun drying up -- threatening millions of dollars in future business and the livelihoods of hundreds of thousands in the world's fifth biggest economy.
Among India's biggest apparel makers with global manufacturing operations, some are looking to move their US orders elsewhere.
Top exporter Pearl Global Industries has told Indian media that some of its US customers asked that orders be produced in lower-duty countries such as Vietnam or Bangladesh, where the company also has manufacturing facilities.
Major apparel maker Gokaldas Exports told Bloomberg it may boost production in Ethiopia and Kenya, which have a 10 percent tariff.
Moody's recently warned that for India, the "much wider tariff gap" may "even reverse some of the gains made in recent years in attracting related investments".
India's gems and jewellery industry exported goods worth more than $10 billion last year and employs hundreds of thousands of people.
"Nothing is happening now, everything is at a standstill, new orders have been put on hold," Ajesh Mehta from D. Navinchandra Exports told AFP.
"We expect up to 150,000 to 200,000 workers to be impacted."
Gems, and other expensive non-essential items, are vulnerable.
"A 10 percent tariff was absorbable -- 25 percent is not, let alone this 50 percent," Mehta added.
"At the end of the day, we deal in luxury products. When the cost goes up beyond a point, customers will cut back."
Seafood exporters, who have been told by some US buyers to hold shipments, are hoping for new customers.
"We are looking to diversify our markets," says Alex Ninan, who is a partner at the Baby Marine Group.
"The United States is totally out right now. We will have to push our products to alternative markets, such as China, Japan... Russia is another market we are really looking into."
Ninan, however, warns that is far from simple.
"You can't create a market all of a sudden," he said. A person stands in a supermarket in the 'Little India' neighborhood of New York City AFP Indian businesses say fresh orders from some US buyers have begun drying up -- threatening millions of dollars in future business and the livelihoods of hundreds of thousands in the world's fifth biggest economy AFP Jewelry is on display at a store in the 'Little India' neighborhood of New York City AFP Among India's biggest apparel makers with global manufacturing operations, some are looking to move their US orders elsewhere AFP Seafood exporters, who have been told by some US buyers to hold shipments, are hoping for new customers AFP
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To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video In part, because he can. Washington, D.C. (which stands for District of Columbia) is not part of any US state and largely falls under the jurisdiction of the federal government. Under the 1973 Home Rule Act, presidents can take control of the DC police during emergencies for 30 days without congressional approval. And because it's a federal enclave, the president also commands the city's National Guard. Some US commentators have observed the move could be a political attempt to distract from ongoing controversy related to the Epstein Files and the release of jobs figures that showed a rise in unemployment. Trump's popularity in his flagship policy areas — in particular immigration — has also recently declined. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video While Trump and his allies have pointed to city crime as justification for the move, his opponents inside and outside of congress say the action is designed to exact control over cities that do not support Congressional Black Caucus, which currently has no Republican members, also said the cities named by Trump as potential targets all have the common thread of being led by Black mayors, labelling the move a "blatantly racist and despicable power grab." The presidency has fewer powers outside of the nation's capital. The governors of the 50 US states preside over the National Guard within their own borders. It's a key distinction that William Banks, a law professor at Syracuse University, US, said would make it far more difficult for Trump to follow through on threats to extend interventions beyond the federal enclave of Washington, D.C. 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In California, a three-day trial investigating whether the deployment of the National Guard was in breach of this law, and potentially unconstitutional, has recently wrapped up, with a decision pending. While the decision would only apply in California, it could give clarity on the outcome of future litigation if the president took a similar course in other states. "Obviously, it would be quite relevant how the court decides," Dickinson told DW. But Dickinson believes there's a wider question confronting the armed forces — using them to patrol American cities could impact how these institutions are perceived by the public. "It could damage the credibility and respect that Americans have for the military and the National Guard," Dickinson said. "These are some of the few institutions in the United States that enjoy very broad bipartisan support." To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Federal command of the DC police ends after 30 days, unless the Republican-controlled Congress approves an extension. The National Guard can remain active indefinitely. Despite alarms being raised by Trump's opponents, who are calling the move an authoritarian flex, Banks expects a return to the status quo is more likely, particularly when it comes to threats to other states. He said the United States' foundational history overthrowing the British military, and the norm that law enforcement should be maintained by civilian police, are crucial in understanding what Americans will accept in their communities. "Our situation is somewhat unique in the United States in not having any expectation of military involvement in law enforcement," Banks told DW. "We don't like military uniforms on our streets, we don't like men and women with guns patrolling our streets, it just rubs against the grain. "Posse Comitatus codifies that principle, but I think the norm is even more important and more fundamental."
