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Trump’s 50% tariffs on India take effect: Industry analysts warn of fallout as export hubs brace for pain; trade deal still in limbo— key takeaways – Times of India
NEW DELHI: The additional 25 per cent tariff imposed by US President Donald Trump on Indian goods over New Delhi’s purchases of Russian oil have come into effect, raising the overall levy on exports to 50 per cent.Trump had first announced reciprocal tariffs of 25 per cent on India from August 7, alongside similar levies on about 70 other countries. He later doubled tariffs on Indian goods to 50 per cent, citing Russian crude imports, but allowed a 21-day window for negotiations.
Who’ll pay the price?
Several sectors, including textiles and apparels, gems and jewellery, seafood (primarily shrimp), and leather goods, are set to be affected by the newly imposed tariffs. The Indian pharmaceutical industry, a crucial supplier of generic drugs to the US, along with electronics and smartphones, including Apple iPhones, have been exempted from the tariffs. While some of the tariff costs may be absorbed by Indian exporters through price reductions and US importers by incurring higher expenses, the tariffs are expected to render Indian exports less competitive compared to exporters from neighbouring countries that face tariffs in the 10–25 percent range. The resulting decline in orders from the US, India’s largest market for these products, is anticipated to adversely impact hundreds of MSMEs (micro, small and medium enterprises), leading to layoffs and increased unemployment.
Exemptions and transit Clause
Indian products already “loaded on a ship and in transit” to the US before the August 27 deadline will be exempt from the additional 25 per cent duty, provided they are cleared for consumption by September 17, 2025, and importers declare the special code HTSUS 9903.01.85 to US Customs, DHS said.
FIEO sounds alarm as US tariffs bite
Apex exporters body Federation of Indian Export Organisations (FIEO) on Tuesday had warned that steep US tariffs have forced textile and apparel manufacturers in Tirupur, Noida, and Surat to halt production, reported PTI.President S C Ralhan said about $47–48 billion worth of India’s exports to the US now face 30–35 per cent cost disadvantages, making them uncompetitive against rivals from Vietnam, Bangladesh and China. Labour-intensive sectors like leather, shrimp and handicrafts are also at risk.He urged immediate support through cheaper credit, loan moratoriums, and faster trade deals, while stressing urgent diplomatic engagement with Washington.Also read: Indian refiners unlikely to stop Russia crude oil trade under US pressure
India stays firm
The government has ruled out retaliation but is preparing measures to cushion exporters from the 50% US tariffs. Senior officials told ET that a Rs 25,000-crore Export Promotion Mission is under consideration, covering trade finance, SEZ reforms, warehousing, ecommerce hubs, and “Brand India” promotion. Commerce minister Piyush Goyal said India will protect domestic interests through GST tweaks to boost demand in sectors like textiles and food processing, while also diversifying trade ties with other economies.Earlier, on Monday, Prime Minister Narendra Modi had said he could not compromise on the interests of farmers, cattle-rearers, and small-scale industries. “Pressure on us may increase, but we will bear it,” he asserted. India had described the US move as “unjustified and unreasonable.”
Experts call it a ‘lose-lose’
Trade experts warned the escalation risks damaging both economies. Mark Linscott, Senior Advisor with The Asia Group, was quoted by that “unfortunately”, the US and India have managed to convert what appeared to be a true and unprecedented win-win on trade into a “remarkable lose-lose.”“Hopefully, we will find a way to conclude a satisfactory mutually beneficial Free Trade Agreement with the United States early rather than late and that would certainly take us to the next step of the visit of President Trump to India,” said former foreign secretary and Rajya Sabha MP Harsh Vardhan Shringla.Meanwhile, Raj Manek, Executive Director and Board Member of Messe Frankfurt Asia Holdings Ltd stated India must intensify its focus on innovation and sustainability to achieve its $100 billion target in textiles. He stressed that investment in man-made fibres (MMF) and performance fabrics would be critical at this stage. “Over 60 per cent of global fibre consumption is now in MMF. With the PLI scheme targeting MMF apparel and technical textiles, India is well-positioned to build scale and future-ready capacity,” Manek said after the conclusion of the 13th edition of Gartex Texprocess India, a tradeshow on garment and textile machinery held in the capital, as reported by ET. He added, “At the same time, adopting energy-efficient machinery, managing effluents effectively, and converting waste into value will help meet ESG expectations while lowering costs.”
Indian refiners unlikely to stop Russia crude oil trade
Indian refineries are continuing their imports of Russian crude despite the Trump administration’s 25 per cent additional tariffs, with officials indicating minimal likelihood of halting purchases. Executives told ET that September-loading cargoes were slightly lower due to reduced discounts on Russian oil, but October volumes could rise as prices adjust. They stressed that there are no official instructions to stop procurement, reflecting the government’s clear message of “country first, commerce later.” Officials, including PM Narendra Modi, External Affairs Minister S Jaishankar, and Commerce Minister Piyush Goyal, have conveyed that India will support exporters through challenges rather than yield to US pressure. Industry representatives also noted that while transitioning from Russian oil is technically feasible, rapid changes are unnecessary as supply lines and global markets remain stable.Also read: India prepares multi-pronged strategy to shield economy; details here
Blow to the US too?
The tariff shock is also expected to hit the American economy. According to a report by the State Bank of India (SBI), US GDP could be shaved by 40–50 basis points, while inflationary pressures are likely to rise due to higher input costs and a weaker dollar.Also read: 50% tariffs on India to blowback on Trump? US GDP could shrink 40–50 bps, inflation to flare “We believe that US tariffs are likely to affect US GDP by 40–50 bps along with higher input cost inflation,” the SBI report noted. Import-sensitive sectors such as electronics, automobiles, and consumer durables are already feeling the strain. The report added that US inflation is expected to remain above the Federal Reserve’s 2 per cent target through 2026, driven by tariff pass-through and currency effects.
Trade deal still in limbo
Talks on a bilateral trade agreement (BTA) between India and the US have stalled, with the American delegation having postponed its scheduled August 25 visit to New Delhi.US Treasury Secretary Scott Bessent has accused India of “profiteering” by reselling Russian oil, while trade talks between the two sides remain on “thin ice,” according to experts. Analysts warn that unless Prime Minister Modi and President Trump engage directly, chances of reviving the deal remain slim. The deadlock raises uncertainty for exporters, who had earlier hoped for tariff relief through a limited trade pact.
NEW DELHI: Government is going to push for bridging the gaps on several contentious issues in trade talks with the European Union next month, while also demanding that the trading bloc offer concessions on carbon tax on the lines of the deal with the US, an official said Wednesday.“We are in the last mile, quite a few things are narrowing down. There are a handful of major issues and we are trying to narrow the gaps and then leave it to the leaders to take a political call,” the official said ahead of the next round of talks scheduled for Sept 8-12. EU commissioner for trade and economic security MaroS Šefcovicis also expected to travel to the Capital after the official level meeting to hold consultations with commerce and industry minister Piyush Goyal.Both sides have set an year-end deadline to finalise the agreement and India is keen that it fills the missing link in Europe, having signed agreements with the UK and the four nation European Free Trade Association, comprising Switzerland, Norway, Iceland and Liechtenstein.The deals are part of efforts to push for a diversified trade basket that provides Indian exporters access to crucial markets. India already has trade pacts, from Australia to Asean, the UAE and Mercosur countries, and is seeking more deals.Sources suggested that govt will help exporters diversify, with the focus expanded from 20 countries to 50, while also coming out with export promotion measures to overcome the challenge of US tariffs. Intensive consultations are lined up with exporters in the coming days.Govt officials said based on the feedback, strategies to offset the impact of the US tariffs, including support from the Centre, will be devised.Outreach in countries, including the UK, Japan, and South Korea, to push textiles exports are also planned, with similar initiatives planned for other sectors. In case of textiles for instance, 40 potential markets have been identified and in each case a targeted approach is proposed, positioning Indian companies as reliable suppliers of quality, sustainable, and innovative textile products. Official said that export promotion councils (EPCs) will be the mainstay of the diversification strategy.
More than 30 baby sleeping bags found on online marketplaces including Amazon and eBay pose a suffocation risk, according to an investigation.
Which? said online marketplaces had been allowing the sale of baby sleeping bags similar or identical to products that were officially recalled by the Office for Product Safety and Standards (OPSS) for suffocation risks.
A common characteristic of the products found by Which? were hoods which could cover a baby’s head and face and result in suffocation, the watchdog said.
The inclusion of hoods does not comply with the British Standards Institution’s safety standards for this reason.
Some of the sleeping bags Which? looked at, such as a teddy bear-style blanket on Amazon Marketplace, did not have arm holes, despite sleeping bags needing them to meet the safety standard.
Those without can cause a baby to slip down inside the sleeping bag, covering their face and risking suffocation.
Which? also found a sack-style sleeping bag listing on eBay which showed a baby being “positively swamped” by the item.
The consumer group also found five listings on Etsy that it was “concerned about”, with two appearing to be identical to recalled products, and the other three in a similar style and listed as sleeping bags.
Which? is urging shoppers to avoid baby sleeping bags with hoods or excess material, such as large bows or other novelty additions, which risk covering a baby’s head and face while they move around in their sleep.
It is best to always use a sleeping bag with arm holes as these help to stop babies slipping down inside the bag.
Other items to avoid included products sold as multipurpose items, such as a swaddle, stroller cover and baby cocoon as well as a sleeping bag, to ensure individual items conform to safety standards.
Which? said it was concerned the products continued to be sold despite market surveillance undertaken by the OPSS earlier this year.
The regulator undertook test purchasing for a range of items sold online, including baby sleeping products, and worked with online marketplaces to remove the listings.
However Which? said it found 35 potentially lethal sleeping bags still being sold just four months later.
Sue Davies, Which? head of consumer protection policy, said: “It’s outrageous that dangerous baby sleeping bags are still being sold on online marketplaces.
“Our previous investigations showed this is part of a wider pattern: unsafe products are removed, only to resurface. The only way to break this cycle is by holding online marketplaces legally accountable, with tough penalties for failures.”
An Amazon spokesman said: “We require all products offered in our store to comply with applicable laws, regulations and Amazon policies.
“The products flagged are not in scope of the safety alerts shared by Which?.
“If customers have concerns about an item they’ve purchased, we encourage them to contact our customer service directly so we can investigate and help resolve their issue.”
An eBay spokeswoman said: “Consumer safety is a top priority for eBay. We work diligently to keep our site safe and prevent prohibited listings through seller compliance audits, block filter algorithms for unsafe listings, and AI-supported monitoring by our team of in-house specialists.
“These proactive measures have prevented millions of potentially unsafe products from being listed every year. Listings that violate eBay policy, including those identified in this investigation, are swiftly removed.”
Etsy has been approached for comment.
New Delhi: While near-term risks to economic activity, principally exports and capital formation remain due to tariff-related uncertainties, the government and the private sector, acting in tandem and concert, can keep the disruptions to a minimum, the Finance Ministry’s ‘Monthly Economic Review’ said on Wednesday. Going ahead, the robust macroeconomic fundamentals continue to bolster the resilience of the Indian economy.
“Setbacks eventually make us stronger and more agile, if handled properly. If the near-term economic pain is absorbed more by those who have the ability and the financial strength to do so, then small and medium enterprises in downstream industries will emerge stronger from the trade imbroglio. Now is the time to demonstrate an understanding of national interest,” according to the ‘Monthly Economic Review July 2025’.
The government’s recent policy initiatives, including the setting up of a Task Force for Next-Generation Reforms and the forthcoming GST reforms, deregulation initiatives of the States, coupled with the sovereign rating upgrade, are set to reduce borrowing costs, attract foreign capital, and bolster investment and consumption.
“These reforms mark the beginning of an accelerated phase of governance transformation, ensuring that India extends its own line of progress, becoming more resilient, inclusive, and globally competitive in an era of rising global economic self-interest,” the Review further stated. The US administration has imposted a hefty 50 per cent tariffs on Indian goods, a move touted as the ‘economic blackmail’.
According to the Economic Review, robust macroeconomic performance and sound fundamentals over the past few years have earned India a well-deserved sovereign rating upgrade by the S&P credit rating agency to ‘BBB’.
“The rating upgrade underscores India’s resilient growth, anchored inflation expectations, and stronger credit metrics, underpinned by fiscal consolidation and improved quality of spending. Building on the growth momentum gained during Q1 of FY26, the Indian economy continues to reflect resilience in July 2025,” it noted.
Record e-way bill generation and a 16-month high in PMI manufacturing point to robust business activity. Further, the stronger expansion in the services PMI indicates growth in the services activity. Domestic demand remained buoyant, as reflected in FMCG sales, UPI transactions, and vehicle sales, supported by strong rural consumption, strengthening urban demand and favourable monsoon conditions.
Forward-looking surveys of the Reserve Bank of India (RBI) signal broad-based improvements in business conditions, with rising capacity utilisation, stable inventories, and optimistic expectations across manufacturing, services, and infrastructure, underscoring sustained confidence in economic activity.
Fiscal performance during Q1 of FY26 reflects a strong capex push, with robust growth in capital expenditure alongside healthy revenue growth driven primarily by non-tax receipts. In July 2025, India’s total exports (goods and services) recorded a growth rate of 4.5 per cent (YoY), driven primarily by a 12.7 per cent growth (YoY) in core merchandise exports.
As of August 08, 2025, the foreign exchange reserves stand at a comfortable level of $695.1 billion, providing an import cover of 11.4 months. “In the dynamic global trade landscape, India has adopted a calibrated approach to negotiating FTAs, aiming to expand market access while protecting domestic interests. Recently, two major agreements, the India-UK CETA and the India-EFTA TEPA, have been concluded, and negotiations continue with a few other nations,” said the Economic Review.
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