The U.S. President Donald Trump, in line with his “Make America Great Again” (MAGA) agenda, views business and manufacturing as the primary drivers of national greatness. Coming from a business background, his focus has been on restoring manufacturing in the United States and thereby creating jobs for Americans. Much of his domestic and international policy revolves around this objective—alongside his personal ambition of securing a Nobel Prize.

To rejuvenate American manufacturing, Trump has sought to make U.S. products more competitive by imposing selective tariffs on imported goods and services. India is among the countries most affected, having been subjected to the highest tariffs, ostensibly for purchasing Russian oil and allegedly helping finance Russia’s war in Ukraine. Ironically, although the EU and China import significantly more energy from Russia, and the U.S. itself imports critical minerals from Moscow, Trump’s administration has not applied similar tariffs to them. In his narrative, revenues from Russia’s trade with the EU, China, and the U.S. are somehow not fueling the war—while India’s trade allegedly is.

From 27 August 2025, India has been slapped with a 50% tariff on a range of products including textiles and apparel, leather, gems and jewelry, auto components, engineering goods, chemicals and seafood. Key sectors such as pharmaceuticals, petroleum products, semiconductors, electronics, and critical minerals remain exempt.

According to a report by Nomura, about 60% of Indian goods exported to the U.S. will now be subject to this higher tariff. India’s exports to the U.S. in FY 2024–25 stood at $86.51 billion; thus, approximately $51.91 billion worth of exports will be affected. This represents around 6.32% of India’s total exports (valued at $821 billion). When measured against India’s GDP of $4.19 trillion in 2024–25, the impact translates to 1.24% of GDP. Given that India’s GDP growth rate for 2024–25 is 6.4%, the tariff could potentially reduce growth to 6.3%—an insignificant macroeconomic impact if usual scenario is taken into considerations.

The real concern, however, lies in the labour-intensive industries targeted by these tariffs. Sectors such as textiles, leather, seafood and gems employ millions of workers, and the new tariffs could result in significant job losses, even if the effect on GDP remains small.

The Indian government is attempting to offset the impact through a range of policy interventions, including diversifying its export markets into East Asia, Africa, Latin America, and the Middle East. However, restructuring export destinations is a gradual process. While the immediate effect on GDP may remain limited, the impact on employment and livelihoods could be substantial. In the longer term, if India succeeds in diversifying its trade partnerships, the strategy may yield rich dividends, especially if the Trump tariffs are lifted voluntarily or overturned by U.S. federal courts.