Donald Trump’s New US Tariffs Threaten Narendra Modi’s ‘Make in India’ Drive
Introduction:
The recent announcement by former US President Donald Trump regarding steep US tariffs on imported goods has sent shockwaves across global markets, with India being one of the hardest-hit economies. These tariffs—reportedly raising import duties to over 50% on several categories—pose a direct challenge to Prime Minister Narendra Modi’s Make in India initiative, which relies heavily on boosting manufacturing and exports.
What Are the New US Tariffs?
In a policy move aimed at protecting domestic industries, Donald Trump’s administration has increased tariffs on a range of imported goods, including:
- Garments and textiles
- Jewelry and gems
- Handmade carpets
- Seafood, especially shrimp
The goal, according to Trump, is to encourage American consumers to buy locally-made products. However, for exporters in India, this means facing significantly reduced competitiveness in the lucrative US market.
Impact on India’s Export Sectors
1. Garments and Textiles:
India is one of the largest exporters of ready-made garments to the US. With the new 50% tariff, the cost advantage that Indian apparel enjoyed will shrink, pushing buyers towards cheaper alternatives from tariff-exempt nations.
2. Jewelry and Gems:
The Indian jewelry industry, especially gold and diamond exports, contributes billions to India’s economy. Higher tariffs may lead to a drop in orders, particularly from mid-range US retailers.
3. Carpets and Handicrafts:
India’s handwoven carpets are globally renowned. But the tariff hike may discourage US importers, affecting artisans and small-scale industries in states like Uttar Pradesh and Rajasthan.
4. Seafood Industry:
Indian shrimp exports to the US have been a major revenue source. The increased tariffs could cause a steep decline in demand, hurting coastal economies in Andhra Pradesh, Kerala, and Gujarat
Make in India Under Pressure:
The Make in India campaign, launched in 2014, aimed to transform India into a global manufacturing hub by promoting exports. These new tariffs create an external economic challenge, as they:
- Reduce India’s price competitiveness in the US market.
- Pressure exporters to look for alternative markets.
- Threaten employment in export-dependent industries.
- Possible Government and Industry Response
- To counter this impact, the Indian government and exporters may:
- Seek bilateral trade negotiations to reduce tariff impact.
- Diversify markets by targeting Europe, the Middle East, and East Asia.
- Focus on value-added products that justify higher prices despite tariffs.
- Explore domestic demand expansion to absorb surplus production
Global Economic Context:
The tariff move is part of a larger global trend of protectionism, where nations prioritize domestic production over imports. Experts warn this could lead to trade wars, increased inflation, and disruptions in global supply chains.
Conclusion:
Donald Trump’s US tariff policy is a wake-up call for India’s export sector and the Make in India initiative. While the immediate effect may be challenging, it could push Indian industries to innovate, explore new markets, and strengthen domestic consumption. The coming months will determine whether India can adapt to this shifting trade environment or face a significant slowdown in its export growth.
(FAQ'S)
1. Why did Donald Trump put 50% tariffs on India?
Donald Trump imposed 50% tariffs on Indian imports in response to India’s continued purchase of Russian oil and to address the US trade deficit with India.
2. Which Indian products are affected by Trump’s tariffs?
High-impact sectors include gems & jewellery, textiles, leather, machinery, chemicals, shrimp, and automotive parts.
3. How will 50% US tariffs affect India’s economy?
The tariffs could slow export growth, impact manufacturing jobs, and reduce GDP growth by up to 0.8% if prolonged.
4. When did Trump’s 50% tariffs on India start?
The additional tariffs began on 7 August, with the full 50% rate effective from 27 August 2025.
5. How are Indian exporters reacting to the US tariffs?
Many exporters are seeking alternative markets, renegotiating contracts, or shifting focus to domestic demand to offset losses.
6. Will US-India relations improve after the tariffs?
Relations are strained, but ongoing trade talks could ease tensions if both sides agree on tariff reductions or exemptions.
7. Does this tariff move push India closer to Russia or China?
Analysts warn that higher US tariffs may push India to strengthen trade ties with Russia and China.
