‘US too large to write off': Trump's 50% tariffs threaten 70% of India's exports, ICRIER warns
In a new paper, the think tank estimates that almost 70% of India's exports now face the brunt of US President Donald Trump's recently announced 50% tariff hike, as reported by Business Today.
'The US remains too large and too important to write off,' the report stressed, urging New Delhi to adopt a two-pronged response, shield vulnerable sectors such as textiles and gems with targeted relief, and re-engage Washington through 'smart, tactical' negotiations that resolve long-standing agricultural disputes.
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Focus on agriculture in trade talks
Authored by economists Ashok Gulati, Sulakshana Rao, and Tanay Suntwal, the paper calls for upcoming trade discussions to prioritise contentious farm issues, especially American demands on genetically modified (GM) products. The authors said the talks should be guided by 'scientific evidence rather than ideology.'
Among the proposals: permit GM corn imports for ethanol blending or poultry feed, and consider easing restrictions on GM soya in seed form, India already imports soya oil. They also recommended steep duty cuts on non-sensitive farm imports with limited domestic production, such as walnuts (currently taxed at 120%), cranberries, blueberries, and breakfast cereals.
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On dairy, ICRIER suggests introducing a tariff rate quota system, allowing a capped volume of imports at lower duties while keeping higher tariffs above that limit. The paper also floats the idea of a certification scheme, similar to halal standards, to assure American buyers that cattle are pasture-grazed or fed on non-meat diets.
High-risk sectors beyond agriculture
While farm exports may be somewhat insulated, labour-intensive manufacturing faces sharper pain. Textiles and apparel confront a tariff disadvantage of more than 30% compared to rivals Bangladesh, Pakistan, and Vietnam, threatening to erode market share unless the government steps in with subsidies, tax rebates, or other incentives.
The gems and jewellery sector is in even greater peril. With 50% tariffs, the report warns the industry could 'come to a standstill very soon.' Other at-risk segments include herbal products, nutraceuticals, and auto components.
Shrimp exports are flagged as a critical short-term casualty. Producers in Andhra Pradesh, West Bengal, and Odisha risk steep value losses and rapid market share erosion. Semi-milled rice exports could also lose ground to competitors like Thailand and Pakistan.
Turning crisis into reform
Rather than falling back on blanket protectionism, ICRIER argues that the tariff shock should be treated as a catalyst for structural change. The paper calls for investment in infrastructure, supply chain efficiency, and R&D 'on the scale of the 1991 liberalisation.'
ICRIER's recommended strategy
Smart US re-engagement – Negotiate science-based access for GM crops, ethanol corn, and dairy; pursue balanced market access.
Targeted relief – Provide urgent fiscal and policy support for severely impacted sectors such as textiles and gems.
Export diversification – Reduce dependence on the US by accelerating free trade agreements with the EU, UK, and CPTPP nations, and expanding outreach to Africa and ASEAN markets.
Policy shifts proposed
Slash tariffs on low-risk imports like walnuts, berries, and cereals.
Move from protection to productivity by prioritising R&D, logistics upgrades, and regulatory reforms.
Recognise that the damage, while not uniform across all exports, will be concentrated in labour-heavy sectors that are central to India's employment base.
The report's bottom line: India's trade relationship with the US is too significant to abandon. Navigating this tariff storm will require both immediate relief measures and longer-term competitiveness upgrades, while keeping the door to Washington firmly open.
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