New Delhi, August 26: The Trump administration has announced fresh 50% tariffs on Indian goods starting August 27, 2025, a move that trade experts say could be a major blow to India’s export-driven economy. The Department of Homeland Security published a draft notification on Monday detailing the new duties, stating they will apply to Indian products “entered for consumption, or withdrawn from warehouse for consumption” in the US on or after 12:01 am EDT, August 27.
What will be hit?
According to the Global Trade Research Initiative (GTRI), the new tariffs will impact $60.2 billion worth of Indian exports, covering textiles, apparel, gems & jewellery, shrimp, carpets, and furniture industries heavily dependent on labour. By contrast, $27.6 billion worth of exports (about 30%) will remain duty-free, while auto parts worth $3.4 billion (4%) will attract a 25% tariff.
Overall, the duties will hit 66% of India’s outbound shipments to the US, threatening India’s position in one of its most lucrative trade markets.
Economic impact
GTRI projects that Indian exports to the US could fall from $86.5 billion in FY2025 to $49.6 billion in FY2026 a steep 43% decline. For the affected labour-intensive sectors, export volumes may sink by as much as 70%, slashing their value to just $18.6 billion.
This downturn raises the risk of significant job losses in export hubs, particularly in textiles and jewellery clusters, undermining India’s competitive edge and weakening its participation in global supply chains.
Who stands to benefit?
As India’s market share shrinks, countries including China, Vietnam, and Mexico are expected to capture US demand, alongside others such as Turkey, Pakistan, Nepal, Guatemala and Kenya. Experts caution that these players could secure long-term market advantages, even after tariff policies are revised.
The Big Picture
For India, these tariffs represent a strategic trade shock, forcing policymakers to rethink economic strategies while confronting rising unemployment in sectors already hit by global competition.