India reels from US tariff hike threat
b>Global Trade Shocks: India Faces US Tariff Threats
In a dramatic turn of events, India’s export giants are racing to combat a looming tariff storm triggered by US President Donald Trump. Trump’s warning to double tariffs from 25 % to 50 % on Indian imports of Russian oil is set to rip through low‑margin sectors ranging from jewelry and textiles to seafood.
1. Political Backdrop
- Trump is slated to meet Vladimir Putin on Friday—its first face‑to‑face dialogue between the two heads since Russia’s 2022 invasion of Ukraine.
- Prime Minister Narendra Modi has reached out to both Putin and Ukrainian President Volodymyr Zelensky, urging a “peaceful resolution.”
- India’s close ties with Moscow put it in a precarious diplomatic cross‑hair.
2. Economic Impact
India, one of the world’s largest crude oil importers, has until August 27 to find alternatives that replace roughly a third of its current foreign oil supply. New Delhi’s export portfolio to the United States in 2024 was worth $87 billion, a figure that is now at risk.
Industry analyses estimate a potential 60 % drop in US sales in 2025 for sectors such as garments. Exporters are now racing to fulfill orders before the deadline, but many warn that this is merely a temporary triage.
2.1. Textile and Garment Exporters
- Vijay Kumar Agarwal, chairman of Creative Group, says: “Whatever we can ship before August 27, we are shipping.”
- Agarwal’s Mumbai‑based company has near 80 % exposure to the US market and warns that shipping goods before the deadline “doesn’t solve the problem.”
- He foresees chaos and a massive loss of business, putting the future of his 15 000‑to‑16 000 employees in jeopardy.
2.2. Apparel Makers Pivot to Low‑Duty Regions
- Pearl Global Industries has noted that some US customers are asking for production in lower‑tariff countries such as Vietnam or Bangladesh.
- Gokaldas Exports is considering boosting production in Ethiopia and Kenya, both with 10 % tariffs.
3. Standstill in Other Sectors
Moody’s recently warned that the “much wider tariff gap” could reverse some of the gains India’s manufacturing has made in recent years.
3.1. Gems and Jewelry
- Last year, India’s gems and jewelry industry exported goods worth over $10 billion and employs hundreds of thousands of workers.
- “Nothing is happening now; new orders have been put on hold,” says Ajesh Mehta of D. Navinchandra Exports.
- He estimates that 150 000 to 200 000 workers will be impacted. A 50 % tariff is “unabsorbable” for luxury goods; consumer demand will inevitably shrink.
3.2. Seafood Exporters Diversify Markets
- Alex Ninan of the Baby Marine Group says the US has “no appetite right now.”
- He is now pushing products into alternative markets: China, Japan, Russia, and other emerging economies.
- He cautions that creating a whole new market “is not easy,” as habits and supply chains are deeply entrenched.
4. The Unknown Future
While businesses scramble to adjust, the core of the dispute remains a geopolitical one—beyond the reach of export factories and the logistics of shipping. The resolution will likely hinge on the outcome of Trump’s meeting with Putin and broader diplomatic negotiations.
In the interim, Indian exporters are facing a stark choice: find a new source of oil, shift production to lower‑tariff nations, or risk losing a large share of their workforce and customer base. The next 30 days will be decisive.
