Trump’s tariff on India has taken effect from Wednesday, 27th August, hitting trade between the two countries and harming the growth of the world’s fastest-growing economy. Reports suggest that the government is planning steps to tackle the impact of the tariff. The 50% tariff is the highest on any country, and goods like textiles, gems and jewellery, footwear, furniture and chemicals are the most affected items. The Indian government is planning to increase exports to other destinations to compensate for the loss due to tariffs. The tariff impacts the most labour-intensive sectors, and hence, the small and medium manufacturers will be the worst affected.
The US government imposed a 25 per cent tariff on India, and later imposed an additional 25 per cent penalty tariff, justifying it in the backdrop of India’s oil imports from Russia. The tariffs have also affected the Indian rupee, which is losing its value and has settled at its lowest since a week on Tuesday. Experts talk about opening up the economy by resolving issues with Washington to reduce the impact of the tariff. A senior economist at DBS Bank informed Reuters that despite the US exports making 2.3% of the GDP of the country, the impact of the tariff will be unparalleled and can shake the fourth-largest economy.
The apparel industry is expected to face a negative growth of 3-5 per cent. In this sector, a few firms might be impacted more than the others, depending on the volume of exports to the US. A lot of jobs will be impacted, and as per the jems and jwelleries sector, over 1 lakh people can become jobless. The chairman of All India Gem and Jewellery Domestic Council, Rajesh Rokde, told news agency ANI that the handmade jewellery sector will be the hardest hit, as products might no longer be accepted and sold. The Surat Diamond Bourse is already facing low exports due to the tariffs and a decrease in demand from China.
The tariffs are projected to impact $48.2 billion in exports, and the situation is not promising for India as shipments to the US may become commercially unprofitable. It will not only impact India but also impact the US consumers, as everything will be more expensive in the coming days.
