From seafood to auto: How will Trump's 50% tariff impact different sectors

India Today

07-08-2025

US President Donald Trump's latest move to double tariffs on Indian exports to 50% has sparked concern across key export sectors. The tariff hike, set to take effect from August 27, follows a warning issued by Trump earlier over India's continued oil imports from Russia.This move will hit key Indian export sectors, including seafood, textiles, gems and jewellery, and auto parts. The tariffs come as retaliation for India's oil purchases from Russia.advertisementThe new duties put Indian exporters at a major disadvantage compared to competitors from Bangladesh, Vietnam and other countries that face lower US tariffs.
Several industry leaders have called the move "doomsday" for their businesses, with many now looking to shift manufacturing to other countries.TARIFFS EXPECTED BUT STILL TROUBLINGSantosh Meena, Head of Research at Swastika Investmart, said the tariff increase was not unexpected.'The Trump administration has announced an additional 25% tariff on Indian exports, effective from 27th August. However, this move was largely anticipated by the markets, as President Trump had earlier hinted at such a development,' he said.Meena added that there is still a window for discussions before the tariffs are implemented. 'A 20-day window remains for negotiations, with a US trade delegation expected to visit India on 24th August,' he said, calling the move 'part of Trump's aggressive negotiation strategy' aimed at pushing India into a trade deal.SECTORS THAT FACE THE FIRST BLOWAmong the worst hit are labour-intensive industries.Meena explained that, structurally, India's economy is driven more by domestic demand and has limited direct exposure to the US, except in sectors like IT, pharmaceuticals and electronics, which are not part of the new tariff list. 'However,' he warned, 'sectors such as textiles, gems & jewellery, and leather may face sentimental pressure in the near term.'Rahul Ahluwalia, Founder-Director of the Foundation for Economic Development, said, 'The main sectoral impact will be felt by labour intensive areas which do not have tariff exemptions like apparel, gems, jewellery and other such sectors where overall we have more than 30bn USD of exports to the US.'SEAFOOD EXPORTS STUNNED BY DOOMSDAY-LIKE BLOWOne of the most severely hit industries is seafood. The US accounts for almost 40% of India's total seafood exports, valued at around Rs 60,000 crore. Most of this is shrimp.Pawan Kumar G, president of the Seafood Exporters Association of India, told The Economic Times, 'We are shocked. This is a doomsday for the seafood industry. It will have an effect on the farmers too.' He also said the sector will need help from the government to recover.An exporter from the west coast told ET that about 15% of the industry's annual sales are held in inventory at any given time, and this unsold stock could lead to big losses. With the next harvest season underway, farmers may stop seeding operations entirely out of fear.TEXTILES AND APPAREL EXPORTERS PUT MANUFACTURING ON HOLDadvertisementTextile exporters from Tiruppur, Noida and Surat have decided to halt manufacturing for US orders. The uncertainty created by the steep tariff hike has made it impossible for them to price their goods competitively.A Sakthivel, Chairman of the Tiruppur Exporters Association, told ET, 'The increased tariff will definitely impact the textile and apparel exports for the next 30-40 days till such time that India works out a favourable Bilateral Trade Agreement with the US.'Sanjay Jain, past president of the Confederation of Indian Textile Industry (CITI), said it's a major blow to the sector. 'New orders will not come. Old orders will have to be shipped at a loss,' he told ET, adding that this could lead to unemployment in textile and leather industries.Rakesh Mehra, Chairman of CITI, said, 'The doubling of US tariff is a huge setback for India's textile and apparel exporters it will significantly weaken our ability to compete effectively vis--vis many other countries for a larger share of the US market.'advertisementIndia's exports to the US in this sector had already been falling since April. In contrast, countries like Vietnam and Bangladesh reported year-on-year growth of 26.2% and 44.6%, respectively, in June 2025.GEMS AND JEWELLERY INDUSTRY MAY SHIFT TO DUBAI, MEXICOThe gem and jewellery sector is also reeling. The US is the largest market for Indian diamond and studded jewellery exports, worth Rs 83,000 crore in 2024-25. The new tariff is pushing the industry to look at alternative manufacturing locations.Kirit Bhansali, Chairman of the Gem & Jewellery Export Promotion Council, told ET, 'The 50% tariff is a doomsday for the Indian gem and jewellery sector. We have to find alternate ways to do business with the US.'Bhansali said exporters will explore rerouting their products through countries like Dubai and Mexico. 'We will set up manufacturing units there quickly. Dubai is the nearest destination for us. We will also look into rerouting studded jewellery through Mexico, if required,' he said, adding that all business will be done legally.According to media reports, Titan Company is also considering shifting part of its manufacturing to the Middle East to retain access to lower US tariffs.advertisementBhansali explained how difficult things have become for the industry. 'When the tariff was 25%, the industry had thought of recalibrating margins. But now with a 50% duty, it has simply become impossible for us to survive.'A US jewellery industry delegation is expected to visit India on August 19 to discuss the matter with Indian industry bodies and the commerce ministry.AUTO PARTS INDUSTRY HIT HARDThe tariff increase will affect nearly half of India's Rs 61,000 crore worth of auto parts exports to the US. While India does not export vehicles to the US, components like those used in commercial vehicles, tractors and earth-moving machines will now attract 50% duty.According to ET, the US already had a 25% duty in place since May 3 on cars, trucks and parts from all countries. Now, the scope has been expanded.An industry executive said, 'While the tariffs levied this year now impact component exports across categories, today's announcement specifically will hit nearly half of the total exports business to the US.'The US is the top destination for Indian auto parts, accounting for 32% of shipments in FY25.advertisementEMPLOYMENT AND ECONOMIC GROWTH UNDER THREATSakshi Gupta, Principal Economist at HDFC Bank, told ET that if the tariffs remain, the impact on employment and investments could grow worse. 'The second-round impact on private capex, domestic manufacturing as well as labour markets could emerge as a key risk over the coming months,' she said.She also pointed out that the job market was already weak in the first quarter of FY26, with labour-intensive sectors like gems, jewellery, textiles, leather and footwear likely to suffer more.India's overall unemployment rate stood at 5.6% in June, with urban joblessness at 7.1% and rural at 4.9%.MACROECONOMIC CHALLENGES LOOMMadan Sabnavis, Chief Economist at Bank of Baroda, said India must act fast. 'This is not good news as the total rate will now be one of the highest imposed by the US. The clue is to negotiate with the government soon,' he told ET.He added that India now faces the difficult task of managing both a drop in exports and a rising oil import bill. This may bring wider implications for the economy and currency.Experts have warned that if the tariffs remain in place, the country's GDP growth could take a hit. The government may need to step in with support for affected sectors, especially small businesses that form the backbone of these industries.As India awaits a US delegation later this month, much will depend on how both sides approach the negotiations. For now, exporters are hoping for a resolution before the new rates go live on August 27.- Ends