Which sectors are worst hit by tariffs?

Paper: GS – III, Subject: Indian Economy, Topic: Trade and External Trade, Issue: Impact of US Tariffs on Indian Exports.

Context:

Recently, on August 27, 2025, the U.S. imposed 50% tariffs on Indian exports, straining trade ties.

• The move threatens India’s export-driven, labour-intensive industries, raising economic concerns and escalating bilateral tensions between the two nations.

Key Takeaways:

Key Sectors Worst Hit by U.S. Tariffs:

Shrimp Exports:

• Export value to the U.S.: $2.4 billion (32.4% of total shrimp exports).
• Tariff increase from 10% to 60% (including new 50% tariff).
• Immediate impact: Shrimp prices in major producing states like Andhra Pradesh fell by about 20%. Further price declines expected.

Diamonds, Gold, and Jewellery:

• Export value to the U.S.: $10 billion (40% of total sector exports).
• Tariff soaring from 2.1% to 52.1%.
• Impact: Production cuts underway, especially in hubs like Surat, where 1.2 million people depend on diamond polishing.

Textiles and Apparel:

• Total exports to the U.S.: $10.8 billion (35% of Indian apparel exports accounted for $5.4 billion).
• Tariff hike from 13.9% to 63.9%.
• Impact: Exporters rushing shipments to avoid further losses, cancelling new styles, downsizing plans, and experiencing working capital stress.

Carpets:

• Exports of $1.2 billion to the U.S., representing 58.6% of total carpet exports.
• Tariffs increased from 2.9% to 52.9%.

Additional Sectors Facing Impact:

• Handicrafts, leather and shoes, furniture and bedding, agricultural products such as basmati rice, spices, tea, pulses, and sesame also face significant tariff increases.

Sectors with Moderate Impact:

Organic Chemicals:

• Exports to the U.S.: $2.7 billion (13.2% of total exports).
• Tariff increased from 4% to 54%.
• Industry groups have sought government intervention.

Metals (Steel, Aluminium, Copper):

• Exports worth $4.7 billion (17% of total exports).
• Tariffs raised significantly, affecting SMEs in Delhi-NCR and foundry hubs.

Machinery and Mechanical Appliances:

• Exports of $6.7 billion (20% of total exports).
• Expected demand drop.

Immediate Impacts and Government Response on Exports:

The 50% U.S. tariffs strain India’s export ecosystem, heavily impacting shrimp, textiles, jewellery, and carpets, with moderate effects on chemicals, metals, and machinery. Government measures support, diversification, and domestic demand are vital to protect jobs and sustain trade momentum.

https://www.thehindu.com/business/Economy/which-sectors-are-worst-hit-by-us-tariffs-explained/article69984521.ece

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