Trump's Tariff Hit: Export of Textiles, Gems and Jewellery Worst Hit While larger companies are planning to shift part of their operations abroad, it is the small exporters that have been hurt most and will now have to deal with low order volumes and thinning margins

Weeks after US president Donald Trump issued an order imposing an additional 25 percent tariff on India; the steep 50 per cent tariffs have kicked in. This is mainly going to impact labour-intensive industries.

As India braces itself against additional tariffs imposed by the US, a report by the think-tank Global Trade Research Initiative (GTRI) has stated that this move could lead to a contraction of up to 70 per cent to India's goods export to the US, crumbling down to $18.6 billion. Industries such as textiles, gems & jewellery, and leather & footwear will be highly impacted.

Though initially the gems and jewellery industry braced for a 25 per cent tariff impact after Trump's 'Liberation Day' announcement, the additional tariff of 25 per cent has further shook the industry. The diamond export business is facing an additional crisis as diamond exports have declined due to weak demand from China. The United States' decision to raise tariffs is going to fundamentally alter the economics of India's leather export market to the US which was over $1 billion last year. This is a sector where margins range between 5–7 per cent, and the duty hike may make this whole sector commercially unviable overnight, in terms of export to the United States.

Crisil Ratings, earlier this month, said there would also be a second-order impact on the earnings of sectors such as diamond polishing, shrimp, home textiles and carpets, which will bear the brunt of US tariffs due to a "structural shift in demand in the US, with reduced discretionary spending driven by expectations of rising inflation". Crisil also emphasized that the uncertainties surrounding the US tariffs might be a new hindrance to capital expenditure decisions in the current financial year.

While larger companies are planning to shift part of their operations abroad, it is the small exporters that have been hurt most and will now have to deal with low order volumes and thinning margins.

"In response to the implementation of President Trump's punitive 50 per cent tariffs on Indian goods effective August 27, 2025, the Government of India has formulated and deployed a comprehensive multi-dimensional strategic framework designed to mitigate adverse economic impacts while strengthening the nation's export competitiveness. Central to this response is the establishment of a substantial INR 25,000 crore financial support mechanism under the Export Promotion Mission (EPM), structured across six financial years spanning 2025-2031. This strategic initiative is specifically designed to provide enhanced access to affordable credit facilities, facilitate improved market penetration opportunities, and create a robust buffer mechanism to insulate Indian exporters from the deleterious effects of the tariff regime," said Hemant Jain, President, PHDCCI.

Around 30 per cent of exports to the US, valued at $27.6 billion in FY25, will remain duty free as product categories like pharmaceuticals, electronics, and petroleum products have been exempt from Trump's tariffs. While auto parts will face a 25 per cent tariff rate.