Diamonds, apparel, footwear and shrimps face steep US tariff blow

New Delhi: The USA’s steep 50 per cent tariffs on Indian goods entering America will severely impact exports and job creation in labour-intensive export sectors such as shrimp, apparel, leather and gems and jewellery.

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

The US accounted for about 20 per cent of India’s USD 437.42 billion worth of goods exports in 2024-25. The US is the largest trading partner of India from 2021-22.

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

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

Mithileshwar Thakur, Secretary General, AEPC (Apparel Export Promotion Council), said the textiles sector, with exports of USD 10.3 billion, is one of the worst-impacted sectors.

“The industry was reconciled to the 25 per cent 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 per cent...has effectively driven the Indian apparel industry out of the US market as the gap of 30-31 per cent tariff disadvantage vis-a-vis major competing countries like Bangladesh, Vietnam, Sri Lanka, Cambodia and Indonesia is impossible to bridge,” he said.

Sharing similar views, Gems and Jewellery Export Promotion Council (GJEPC) Chairman Kirit Bhansali has said that 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 manufacturer,” he has said adding competing manufacturing hubs such as Turkiye, Vietnam and Thailand continue to enjoy significantly, making Indian products relatively less competitive in the US market due to India’s 50 per cent 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 that diamond cutting and polishing, which sustains lakhs of jobs across Gujarat’s hinterland, especially Surat, Navsari, Bhavnagar and Jasdan.

A Kolkata-based seafood exporter said that 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 per cent tariff. Indian shrimp already attracts a 2.49 per cent anti-dumping duty and a 5.77 per cent countervailing duty. After this 50 per cent, the duty will be significantly high,” the shrimp exporter said.

Similarly, a leather exporter said that some of the companies have orders in hand for about 2-3 months, but the US firms are demanding about a 20 per cent discount to retain the orders. “Considering the 50 per cent 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 firms doing business with the US anticipate a 50 per cent reduction/retrenchment in their workforce/ supervisors/ staff and management executives due to loss of US business.

US tariffs hitting 66 per cent of India’s exports may slash shipments to USD 49.6 billion in FY26, with exporters urging relief, diversification, and stronger trade pacts.