With the US accounting for nearly 18% of India’s total exports a cool $87 billion in goods each year according to recent trade statistics the country depends heavily on American demand. The products at risk make up the heart and soul of the Indian export dream: diamonds, textiles, garments, leather goods, furniture, gems, jewellery, and, to a lesser extent, pharmaceuticals and IT services though those two sectors have, so far, escaped the 50% tariff onslaught.
Shweta Tyagi*
In the world of geopolitics, there are staid, predictable performances, and then there are productions so riddled with twists and plot devices you’d swear they were written by a Netflix showrunner working overtime. Into this latter category falls Donald Trump’s latest foray into international trade drama: an abrupt imposition of 25–50% tariffs on a wide range of Indian exports to the United States. This high-octane move, sparked by India’s continued oil dealings with Russia and long-standing trade imbalances, has set both economies ablaze with speculation, anxiety, and let’s be honest a fair bit of confusion.
Tariffs, at their core, are taxes imposed on imported goods, and no one loves a good tax story quite like US political leaders during election campaigns. In Trump’s economic playbook, tariffs serve several purposes. They can be retaliatory tools (think: “You won’t play by my rules? Here’s a big, beautiful tariff!”), bargaining chips at the negotiating table (“We’ll drop the tariffs if you do what we want”), or simply a way to jazz up a slow news cycle. This time, the rationale is a cocktail of genuine trade grievances and the apparent need to chastise India for pumping rubles into Russian oil pipelines.
India, meanwhile, is staring down the barrel of a massive economic recalibration. With the US accounting for nearly 18% of India’s total exports a cool $87 billion in goods each year according to recent trade statistics the country depends heavily on American demand. The products at risk make up the heart and soul of the Indian export dream: diamonds, textiles, garments, leather goods, furniture, gems, jewellery, and, to a lesser extent, pharmaceuticals and IT services though those two sectors have, so far, escaped the 50% tariff onslaught. Indian exporters, suddenly faced with the prospect of a US market either shutting out their goods with suffocating duties or pricing them out for consumers and businesses alike, are now collectively holding their breath. Warehouse facilities from Surat to Kanpur are reportedly filling up with unsold stock, as American buyers pull back on orders and scramble for global alternatives.
The pain will not be evenly distributed. For India, labor-intensive industries especially textiles and diamonds, which collectively employ millions in small and medium enterprises are in the firing line. Dropping export revenues will cascade into lower industrial output, higher unemployment, and a muted GDP growth projection. While India Inc. is resilient, analysts estimate the new tariffs could shave off as much as 0.3-0.5 percentage points from the national GDP, and drag 2025 growth just below 6%, the lowest in years. The nervousness on Dalal Street is palpable, with the rupee facing downward pressure thanks to dollar outflows and uncertain business sentiment. India’s banking sector could also find itself with more non-performing assets, as cash-strapped exporters and small manufacturers struggle to make loan payments.
50% Drama, 100% Confusion
Trump’s tariffs aren’t just a one-way street of pain aimed solely at New Delhi. In fact, their ricochet effect will soon be felt across Main Street, USA. While some American manufacturing workers have applauded the move, hoping it will throw a life vest to dying domestic industries, economic reality has a way of stealing the show. US jewelry makers who rely on Indian-cut diamonds, textile companies that depend on low-cost fabric imports, and furniture retailers keen to stock affordable woodcraft are all facing a grim new supply chain math. Raising input costs leads to higher retail prices, fewer choices, and ironically no guarantee that any of the ‘lost’ production will shift to American soil. Most of these industries offshored years ago because building the same supply chains domestically is neither nimble nor cheap.
Consumers, of course, will ultimately foot the bill, paying more for engagement rings, yoga pants, and stylish sofas. Small businesses may be unable to absorb these costs in an already strained post-COVID economy, preferring instead to shift supply chains to other low-tariff nations like Vietnam or Bangladesh. The US may see a symbolic narrowing of its trade deficit with India, but it will come at the cost of consumer satisfaction and variety never mind any short-term market volatility as Wall Street digests another jolt of “policy by surprise”.
As India strategizes for a way out of this sudden limelight, New Delhi is taking a two-pronged approach. First, diplomats are trying to calm the waters in quiet rooms and discreet back channels, hoping for a negotiated truce (or at least a partial rollback) before the full economic shock sets in. Meanwhile, policymakers are scouting aggressively for new markets African economies, the European Union, Southeast Asia where Indian exporters might shore up their losses. The playbook involves not just market diversification, but also boosting domestic consumption and rolling out new incentives for affected industries. However, replacing the US as a buyer at scale is no trivial feat, and few global partners can soak up excess production on such short notice.
Leading by Whim
If governing with consistency and predictability were Olympic sports, Donald Trump would probably still claim he set the record while changing the rules halfway through. In the Trump era, policy especially foreign policy has often been transactional and impulsive. Announcements come via tweet just as often as through formal channels. International partners are alternately celebrated or threatened, depending on the news cycle or the whisperings of cable news hosts. Trump’s defenders call his unpredictability ‘savvy negotiation’. They argue he’s a master of the element of surprise, leveraging chaos to elicit concessions no one else could. What’s clear, though, is that this is a rollercoaster for governments, businesses, and ordinary citizens in both countries.
Reliability in a national leader isn’t about agreeing with every decision. Trust is built on consistent expectations, fair warning, and the sense that today’s handshake will mean something tomorrow. Trump’s record on trade is filled with abrupt decisions, steel and aluminium tariffs on the EU, trade wars with China that roiled global markets, abrupt about-faces in relationships with NATO and traditional allies, and now these unpredictable blows in the direction of India. Even Trump’s own advisers and American business lobbies are frequently left scrambling to respond, as the ground shifts beneath their feet.
For US-based firms, the unpredictability justifies greater caution: new investments are delayed, manufacturing plans postponed, inventories hedged at higher costs and in the end, innovative momentum is lost, all because no one is certain what the rules will be tomorrow. As one exasperated trade lobbyist commented, “Running a business is hard enough without needing a crystal ball to guess the next White House tweet.”
In both countries, the effect reaches beyond economics. Unpredictable leadership frays the diplomatic trust which is the foundation of long-term alliances and partnerships. The US and India may be strategic friends, but the dustup over tariffs has introduced awkwardness and second-guessing if not outright mistrust. Allies quietly ponder how reliable the US really is under Trump, wondering whether friendship is just as transactional as any business deal. Meanwhile, citizens on both sides see everyday costs rising, jobs threatened, and political leaders more interested in symbolic gestures than sustainable solutions.
What next?
Despite all this, there is hope that the turbulence won’t last. Both the US and India boast robust civil societies, vocal business lobbies, and institutional backchannels capable of deescalating headline-driven tensions. Election cycles, global economic realities, and grassroots commercial interests may yet force a walk-back of the most debilitating of these tariffs, even if Trump is in no hurry to blink first. Until then, the lesson is clear: whims are fun on reality TV, less so as a basis for international economic strategy. For India, the silver lining may be the impetus to accelerate internal reforms and market diversification. For the US, the episode should remind voters that the world is a more stable, prosperous place when unpredictability is reserved for game shows rather than trade deals.
In the meantime, enjoy your imported goods while they last or until they’re replaced with the “great all-American alternatives” nobody really asked for. Because in a world where tariffs change at the speed of a tweet, and nations are governed by personalities as much as policies, everyone is left guessing which, come to think of it, might be the only certain outcome in this entire saga.
*Associate Editor, Focus Global Reporter
