Tariff on India: How 50% US Duties Are Reshaping Indian Job Sectors

The decision by the United States to impose a 50% tariff on Indian goods—dubbed the highest among any US trading partner—has sent deep tremors across India's job market and export-oriented sectors. This unprecedented "Tariff on India" is not just a headline; it is a turning point for millions whose livelihoods depend on export-driven industries. Let's explore the far-reaching impact of this policy using all relevant keywords, with "Tariff on India" as the primary focus.

The 50% Tariff: What Changed and Why?

In August 2025, President Donald Trump announced an additional 25% tariff on Indian imports, on top of the existing 25% rate, bringing the total tariff to a staggering 50%. The move was justified as a penalty for India’s continued purchases of Russian oil, but it is also part of a broader strategy to make American manufacturing competitive. For India, a country whose exports to the US alone touched $86.5 billion in FY25—almost 20% of its total exports—the cost of doing business with its largest export partner has skyrocketed.

Sectors Most Affected by the Tariff on India

1. Textiles and Apparel

India’s largest goods export to the US: Textile and apparel sectors are the most exposed. With the effective tariff climbing to nearly 64% for many products, Indian manufacturers are at a massive competitive disadvantage compared to suppliers from Bangladesh (20% tariff), Vietnam (20%), and Cambodia (19%).

Job Losses: India’s textile and apparel sectors employ over 45 million directly. Industry bodies warn of “massive job losses” as export orders are canceled, and manufacturing slows to a crawl.

Exporters Respond: Many exporters are halting or renegotiating US orders; some are shipping goods at a loss just to retain clients.

2. Jewelry, Gems, and Leather

These labor-intensive sectors have been forced into crisis, with nearly 55% of US-bound shipments affected.

Marginal Businesses at Risk: MSMEs, the backbone of jewelery and leather exports employing millions, are especially vulnerable as they lack the cash reserves to absorb these shocks.

3. Auto Components and Engineering Goods

Increasing Input Costs: Auto parts, engineering items, and certain electronics now face pricing pressures compared to peers in Vietnam, South Korea, and Indonesia.

Affected sectors fear not only job losses but also “de-industrialization” as US buyers turn to alternative suppliers.

4. Other Targeted Sectors

Marine Exports and Footwear: Exporters in shrimps, seafood, and footwear, which rely heavily on US demand, are bracing for layoffs.

MSMEs Hit Hardest: The multiplier effect within India’s MSME sector—often family-run businesses in rural and semi-urban areas—amplifies the impact.

The Economic and Job Market Fallout

Direct Job Losses

Labour-Intensive Sectors at Risk: Textile, garment, jewelry, leather, and marine sectors together employ tens of millions. Industry groups warn that hundreds of thousands of jobs could be lost if the tariff on India remains in place.

Even short-term disruptions, such as cancelled orders or reduced margins, will force layoffs in these sectors.

GDP and Growth Concerns

Economy-wide Impact: Analysts estimate the tariff could drag India’s GDP growth by up to 0.6 percentage points—from a projected 7% to around 6% for 2025.

Reduced Export Competitiveness: The additional cost burden places Indian exporters at a 30–35% price disadvantage compared to Asian peers.

Stock Market Uncertainty: Investor sentiment has wobbled, with concerns about corporate earnings and currency weakness.

Wider Effects

Rupee Pressure: Shrinking exports widen the trade deficit, weakening the rupee and prompting possible monetary tightening by the RBI.

Inflationary Pressures: A weaker rupee could lead to higher import costs, stoking inflation, and ultimately reducing consumer purchasing power.

MSMEs and Rural Impact

The "Tariff on India" is especially harsh on micro, small, and medium enterprises. These make up the vast majority of India’s exporter base, provide the bulk of formal and informal sector jobs, and are heavily concentrated in rural belts and small towns. The inability to absorb losses or switch export destinations quickly makes mass layoffs almost inevitable if the tariffs persist.

The Global Context and Policy Responses

International Comparison

India’s Disadvantage: With a 50% tariff, India is now the most heavily taxed trading partner for the US, alongside Brazil.

US Buyers Shift: US importers are already re-evaluating sourcing, turning instead to countries with more favorable tariff rates such as Bangladesh, Vietnam, and Cambodia.

Indian Government Response

Mitigation Plans: The government is pledging support for exporters, including interest subsidies, alternative market development, and expedited trade talks with the US.

Bilateral Tensions: With relations at a new low, trade diplomacy is a key priority moving forward.

The Way Forward: Adaptation and Resilience

Export Diversification

Indian exporters are being urged to pivot swiftly to other markets—the EU, Canada, Latin America, ASEAN—while leveraging new and existing Free Trade Agreements.

Value Addition and Branding

Moving up the value chain, co-developing US-specific products, and building premium brands could offset some of the cost disadvantage, though this requires time and capital.

MSME Support

Targeted packages for MSMEs, joint ventures in key overseas markets, and investments in productivity are seen as critical steps to minimize layoffs and retain jobs.

Conclusion

The imposition of the 50% tariff on India marks a historic—and deeply disruptive—moment for India’s job sectors. From textiles and gems to leather, auto parts, and MSMEs, the ripple effect is being felt across the economy. While the government and industry are working to adapt, the immediate effects include canceled export orders, shrinking margins, widespread layoffs, and a palpable sense of uncertainty.

Ultimately, how India navigates this challenge will define its economic and employment trajectory for years to come. Resilience, innovation, and aggressive market repositioning are the only paths forward as Indian exporters, workers, and policymakers grapple with the realities of the new global trade order.