Donald Trump’s new 50% tariffs on Indian exports threaten Narendra Modi’s Make in India dream, risking millions of jobs and escalating a US-India trade war.
Table of Contents
Introduction
The escalating US-India trade war has reached a boiling point after Donald Trump’s administration imposed 50% tariffs on Indian exports — among the highest levies ever placed on any trade partner. The move, driven by Trump’s “America First” agenda, directly clashes with Prime Minister Narendra Modi’s “Make in India” vision, threatening millions of jobs, India’s manufacturing ambitions, and the country’s global trade influence.
From garment workers in New Delhi to diamond cutters in Surat, thousands of Indian families are staring at an uncertain future as industries dependent on US demand brace for impact.
Why Trump’s Tariffs Are So Damaging
On Wednesday, the White House imposed 50% tariffs on Indian goods, targeting sectors like:
- Apparel & textiles
- Jewelry & diamonds
- Steel & automobiles
- Seafood & processed goods
Trump’s decision stems from two primary factors:
- Punishment for India’s Russian oil imports
Half the tariffs are retaliation for India’s rising oil purchases from Moscow after Russia’s invasion of Ukraine. - Reducing the US trade deficit
With the US-India trade gap reaching $45.7 billion in 2024, Trump is doubling down on his “America First” campaign, prioritizing US manufacturing jobs over cheaper imports.
However, this strategy risks crippling India’s export economy, undermining one of Modi’s flagship policies, Make in India, which was launched to transform India into a global manufacturing hub.
The Human Cost: Millions of Jobs at Risk
For workers like Jinul Abedeen, a skilled zardozi artisan in New Delhi, these tariffs threaten a livelihood built over decades. After spending a year mastering the ancient embroidery technique, Abedeen has supplied brands like Gap, Ralph Lauren, and American Eagle for 12 years.
“If the company is in trouble, we are in trouble. If the country is in trouble, we are in trouble,” Abedeen said, reflecting growing anxiety on factory floors.
Similarly, Neeraj Pandey, a garment worker for 22 years, fears losing everything. From his modest $205 monthly income, he’s funded his children’s education — but Trump’s tariffs put his entire future in jeopardy.
For Sumitra Devi, one of the few working women in her Jharkhand village, the stakes are even higher:
“If I lose my job, my daughters will have to go back to government school. They’re proud I work, and I don’t want to take that away from them.”
Impact on Modi’s ‘Make in India’ Dream
Launched in 2014, Make in India is Modi’s signature initiative, aimed at:
- Reducing reliance on imports
- Boosting domestic manufacturing
- Creating millions of jobs
- Positioning India as a global alternative to China
The government has invested $26 billion into manufacturing incentives, but with exports making up a huge share of GDP, Trump’s tariffs could derail years of progress.
Key sectors hit hardest:
- Garments & Textiles: $5.4B in US orders face up to 90% cancellations
- Diamonds: Surat’s $50B diamond industry — employing 5M workers — faces steep order drops
- Steel & Automobiles: Production capacity already cut by 50% in peak season
“Worse Than Covid”: Industry Leaders Sound Alarm
According to Sudhir Dhingra, owner of Orient Craft, which exports 82% of its products to the US:
“This period is very challenging. Orders are being canceled. It’s worse than Covid.”
Hemant Makhija, head of fabrics at the same factory, estimates up to 20 million workers could lose their jobs if the crisis deepens.
Ajay Srivastava from the Global Trade Research Initiative predicts a 60-90% drop in US-bound shipments, calling it one of India’s biggest trade disruptions in decades.
Diamonds, Seafood & Beyond: A Widening Shockwave
The western city of Surat, which handles 90% of the world’s diamond polishing, employs over 5 million artisans. With the US being the largest diamond market, job cuts and wage reductions are almost inevitable.
Similar ripples are expected across:
- Seafood exports
- Leather goods
- Processed foods
- Steel components
Experts warn that unless India diversifies its markets, the long-term damage could be irreversible.
India’s Response: Countermeasures & Diversification
Unlike other nations negotiating tariff relief, Modi is refusing to back down. Calling the tariffs “unfair and unjustified”, India is:
- Waiving import duties on key raw materials
- Fast-tracking trade talks with Europe, Russia, and South America
- Seeking new markets to offset US losses
However, experts warn that alternative markets cannot replace the US overnight. In 2024, US-India bilateral trade hit $129.2B — the highest ever — making America India’s largest export partner.
The Geopolitical Fallout
Trump’s aggressive push for reshoring US manufacturing could strain Washington’s relationship with New Delhi, a key strategic partner in countering China’s growing influence.
Analysts warn that a prolonged standoff could:
- Erode India’s global competitiveness
- Push Indian manufacturers toward Russia and Europe
- Create deep scars in the Indo-US partnership
Will India’s Economy Survive the Shock?
Despite the challenges, India’s 6-7% GDP growth, strong domestic demand, and ongoing reforms provide a buffer.
“India may face short-term pain, but the vast domestic market will cushion the blow,” Srivastava said.
Still, for millions of factory workers, diamond polishers, and artisans, the immediate reality is harsh: canceled orders, unpaid bills, and uncertain futures.
FAQs
1. Why did Trump impose tariffs on Indian goods?
Trump introduced 50% tariffs to penalize India’s purchase of Russian oil and reduce the US trade deficit.
2. How do these tariffs affect “Make in India”?
The tariffs undermine Modi’s initiative by making Indian exports uncompetitive in the US, threatening millions of manufacturing jobs.
3. Which sectors are hit hardest?
Garments, textiles, diamonds, steel, automobiles, and seafood exports face the biggest losses.
4. How is India responding?
India is diversifying markets, waiving duties on raw materials, and exploring new trade partnerships.
5. Is a trade compromise possible?
Negotiations are ongoing, but Modi has signaled India won’t compromise on its core economic interests.