Clothing, Footwear, and Jewelry: Trump’s Tariff Impact Explained

The USA is the largest importer of textiles and footwear from India. With a 20-25% tariff, these products might become more expensive in the American market, potentially impacting India's shipments and business.
The impact of tariffs on the US-India trade

Source: aajtak

U.S. President Donald Trump has made a significant announcement regarding tariffs on India. He indicated the potential imposition of a 20-25% tariff on Indian goods. However, this is not a final decision yet. This possibility was hinted at as the sixth round of talks concerning the India-US Trade Deal is imminent. If implemented, this tariff could affect several sectors in India. Let’s delve into which products might bear how much tax.

Impact on Textiles and Garments

Textiles are among India's major exports. As the largest importer of textiles and footwear from India, a 20-25% tariff in the American market could make these products pricier, potentially hampering India's shipments and business operations.

Significant Impact on Jewelry and Diamonds

India ranks as one of the leading export countries of diamonds globally, and the U.S. imports significant quantities from India. With tariffs, jewelry and diamond prices could rise, affecting demand from India, as American buyers may seek alternatives. These products could face a tariff of 26-27%.

The impact of tariffs on the US-India trade

Source: aajtak

How Will It Affect Automobiles and Auto Parts?

In terms of the auto sector, India has historically exported a significant amount of auto products to the U.S. Already, there's a 25% tariff on steel and aluminum, and an additional 25% tariff on the auto sector may further impact India's market demand. A tariff of up to 27% could be imposed on these products.

The Enormous Market of Mobiles and Electronics

India exports more than $14 billion worth of mobile, telecom products, and electronics to the U.S. annually. The imposition of tariffs could lead to increased prices for these products, potentially reducing billions of dollars in exports. In contrast, the U.S. might see increased trade with countries other than India. Additionally, the chemical sector may also be affected by these tariffs.

Sectors Exempt from Tariffs

If tariffs are enacted, certain sectors in India may be exempted by the U.S. This includes pharmaceuticals, semiconductors, energy products (oil, gas, coal, LNG), and copper. These items are crucial for the U.S., which is why it’s unlikely tariffs will be imposed on them.

Potential Loss for India

Should the U.S. enforce its tariff policy, experts estimate that India’s annual exports could see a reduction of $2 to $7 billion due to tariffs. In 2023-24, India exported $77.52 billion worth of goods to the U.S., accounting for 18% of India’s total exports.

Ongoing Trade Talks

Discussions regarding the trade agreement between India and the U.S. are ongoing, with the American team set to visit India for the sixth round of talks. India aims to minimize tariffs while promoting Indian business in the U.S. Moreover, the U.S. will try to negotiate India opening its agriculture and dairy markets to American products.

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