Textile, gems & jewellery, footwear, shrimp stocks in focus as the US' 50% tariff comes into effect

Sectors that would bear the brunt of the high import duties imposed by the Trump administration include textiles/clothing, gems and jewellery, shrimp, leather and footwear, animal products, chemicals, and electrical and mechanical machinery.

The domestic equity market was closed on Wednesday (August 27) on account of Ganesh Chaturthi.

Exporters said the imposition of a 25% penalty on India over and above the 25% tariff move will disrupt the flow of Indian goods to its largest export market.

The US accounted for about 20% of India's $437.42 billion worth of goods exports in 2024-25. The US was the largest trading partner of India from 2021 to 2022.

In 2024-25, the bilateral trade in goods stood at $131.8 billion ($86.5 billion in exports and $45.3 billion in imports).

"The 50% tariff is like an economic sanction. It would lead to closure of units and job cuts," an exporter from the leather sector said.

An apparel exporter said the textiles sector, with exports of $10.3 billion, is one of the worst-impacted segments.

"The industry was reconciled to the 25% reciprocal tariff announced by the USA, as it was prepared to absorb a part of the tariff increase. But the additional burden of another 25%... has effectively driven the Indian apparel industry out of the US market, as the gap of 30-31% tariff disadvantage vis-a-vis major competing countries like Bangladesh, Vietnam, Sri Lanka, Cambodia and Indonesia is impossible to bridge," the exporter said.

Gems and Jewellery Export Promotion Council (GJEPC) Chairman Kirit Bhansali has said there is a significant dependency on the US market.

"For cut and polished diamonds, half of India's exports are US-bound. With this tariff hike, the entire industry may come to a standstill, placing immense pressure on every part of the value chain, from karigars (artisans) to large manufacturers," he has said, adding that competing manufacturing hubs such as Türkiye, Vietnam, and Thailand continue to enjoy significant advantages, making Indian products relatively less competitive in the US market due to India's 50% tariff.

This imbalance, he said, if unaddressed, could erode India's long-standing position as a key supplier to the US.

Another official from the diamond sector said diamond cutting and polishing sustains lakhs of jobs across Gujarat's hinterland, especially Surat, Navsari, Bhavnagar, and Jasdan.

A Kolkata-based seafood exporter said now India's shrimp will become "super" expensive in the US market, impacting the competitiveness of exporters.

"We are already facing huge competition from Ecuador, as it has only a 15% tariff. Indian shrimp already attracts a 2.49% anti-dumping duty and a 5.77% countervailing duty. After this 50%, the duty will be significantly high," the shrimp exporter said.

Similarly, a leather exporter said some of the companies have orders in hand for about 2–3 months, but the US firms are demanding a 20% discount to retain the orders.

"Considering the 50% tariff for India, if the discount is not accepted, orders are kept fully on hold or cancelled. Also, if a discount is not given, no new orders will be placed," the leather footwear exporter said, adding that firms doing business with the US anticipate a 50% reduction/retrenchment in their workforce/supervisors/staff and management executives due to loss of US business.

Economic think tank GTRI said the US tariffs will hit 66% of India's $86.5 billion exports to America.

Exporters have urged the government to announce steps to deal with these high tariffs.

Federation of Indian Export Organisations (FIEO) President S C Ralhan has urged a moratorium on payment of principal and interest for loans up to a period of one year.

Additionally, automatic enhancement of the existing limit by 30%, along with collateral-free lending on Emergency Credit Line Guarantee Scheme (ECLGS) lines, may also be pushed, as these will help in addressing the stress of these companies without much burden on the exchequer, he said.

Besides, expanding PLI schemes, enhancing infrastructure, and investing in cold-chain/storage assets to strengthen competitiveness and aggressive market diversification through accelerated trade agreements (FTAs) with the EU, Oman, Chile, Peru, the GCC, Africa, and other Latin American countries, with a provision for early harvest for labour-intensive sectors, should be prioritised.

FIEO appeals for swift, coordinated action among exporters, industry bodies, and government agencies to protect livelihoods, reinforce global trade links, and navigate this turbulent phase.