Indian exporters are bracing for a sharp decline in U.S. orders after trade talks collapsed and Washington confirmed steep new tariffs on the South Asian nation's goods will take effect from Wednesday, escalating tension between the strategic partners.

Gujarat

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

Global Tariffs

Indian exporters are confronting significant challenges following the imposition of steep U.S. tariffs, which were enacted after trade negotiations between the two countries broke down. The new levies, which can reach up to 50 percent, affect a broad array of Indian exports to the U.S. and include additional duties linked to India's continued purchases of Russian oil. 

Exporters report immediate disruptions, with some factories halting operations due to cancelled U.S. orders. Indian officials have stated that affected companies will receive financial support and are being encouraged to seek alternative markets. Industry groups estimate that over half of India's merchandise exports to the U.S. could be impacted, with potential benefits for rival exporters in China, Bangladesh, and Vietnam. Economic analysts warn that the trade dispute could reduce India's growth rate by nearly one percentage point over the coming year.

Indian exporters brace for impact as steep U.S. tariffs hit

Indian exporters are bracing for impact. Steep U.S. tariffs kicked in Wednesday after trade talks collapsed. That leaves India facing levies of up to 50 percent on its exports to the U.S., including an extra duty imposed to punish the country for buying Russian oil. Firms like this leather factory in Kampur, Uttar Pradesh state know they are on the front line of the trade war. Exporter Shamim Azad says the effect has already been devastating. He says all his orders from the U.S. are now void, with customers telling him to stop work on previous purchases. Azad says some factories that were totally dependent on the U.S. market have come to a complete halt. India had been optimistic that tariffs would be capped at 15 percent, but officials now say there's no hope of any immediate relief. They say companies hit by the tariffs will get financial assistance and be encouraged to diversify to markets in China and elsewhere. Both sides blamed political misjudgments for the failed talks, but the Russian oil has become a major sticking point too. U.S. Treasury Secretary Scott Besant and others have accused India of funding Moscow's war against Ukraine by buying its oil. Now, Indian exporter groups estimate that the tariffs could hit nearly 55 percent of the country's merchandise shipments to the U.S., benefiting rivals like China, Bangladesh and Vietnam. One engineering industry body predicted exports in its sector could fall by almost a third from September. Analysts at Capital Economics have predicted the trade war could knock almost one percentage point off the country's growth this year and next.

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Indian exporters brace for impact as steep U.S. tariffs hit

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