Who will be hit hardest by Trump's 50% tariff on India? A sector-wise breakdown
INDIAN DEFENCE
The announcement of a proposed 50% tariff on Indian exports by U.S. President Donald Trump has set alarm bells ringing across India’s trade-dependent sectors. If implemented, this unprecedented hike could trigger one of the most severe trade disruptions in recent memory between New Delhi and Washington. The United States is India’s largest export destination, absorbing goods worth over $75 billion annually, and such a sharp tariff escalation threatens to gut competitiveness across multiple industries.
Beyond the headline sectors, the pain would seep into India’s broader economy in complex ways. Small and medium enterprises (SMEs)—the backbone of India’s export engine—would bear the brunt of sudden market losses, with limited capacity to pivot to new geographies. The gems and jewellery industry, heavily dependent on American demand for polished diamonds and gold ornaments, would face a cash flow crunch, potentially triggering job losses in traditionally labour-intensive hubs like Surat and Jaipur. Meanwhile, the leather and footwear sector, already struggling with post-pandemic slowdowns, would risk losing its thin margins entirely under the tariff burden. For high-tech manufacturing segments such as electronics assembly, the challenge lies in maintaining U.S. market presence when competing against tariff-free suppliers from Southeast Asia. On the macroeconomic front, reduced export earnings could widen India’s current account deficit, pressure the rupee, and erode investor confidence, while the political narrative shifts toward safeguarding domestic industries through subsidies or alternative trade deals. As the countdown to the tariff implementation date ticks away, sector leaders and policymakers are in urgent consultations to craft mitigation strategies. However, if Washington holds firm and New Delhi cannot secure exemptions, the blow could realign India’s export strategy for years to come, pushing it toward greater diversification but also forcing painful adjustments in the short term.
The most immediate casualties would be India’s textile and apparel sector, which sends nearly 27% of its output to the U.S., followed closely by the pharmaceutical industry, which dominates America’s supply of generic medicines. The IT services sector, which relies on high-value contracts with American corporations, would also be squeezed—not directly by tariffs on software, but by potential retaliatory visa or outsourcing restrictions in a climate of strained relations. The engineering goods industry, especially automobile components and industrial machinery, faces the risk of mass order cancellations due to price spikes, while agriculture exports, including seafood, spices, and basmati rice, could see demand collapse in the face of higher shelf prices for U.S. consumers. This ripple effect could leave exporters scrambling for alternative markets, a transition that is neither swift nor simple given the entrenched reliance on U.S. buyers.