Trump Plans Talks With Modi To Resolve Trade Impasse: A Look At Tariff Impact On India And Sectors Bearing The Brunt

(MENAFN- Live Mint) Within two weeks of steep 50% US tariffs taking effect in India, US President Donald Trump said on Tuesday that India and the US“are continuing negotiations to address the Trade Barriers between our two Nations”.

Sharing an update on India-US trade talks, Trump said on Truth Social that he is looking forward to speak with his“very good friend” Prime Minister Narendra Modi in the upcoming weeks, adding that,“I feel certain that there will be no difficulty in coming to a successful conclusion for both of our Great Countries.”

Earlier in July, Washington imposed an additional 25% tariff on Indian goods on top of an existing 25% tariff, bringing the total to 50% to penalise India for buying Russian oil.

Trump's change of mind

Trump's recent post reflects a shift in his tone towards India as he has repeatedly criticised India's decision to purchase discounted Russian crude oil amid the Ukraine war.

Trump has also accused India of“war profiteering” by refining and exporting Russian oil, even going so far as to call the Ukraine conflict“Modi's war”.

Also Read | From 'dead economy' to 'good friend Modi': Donald Trump's shifting tone on India

During the height of tensions earlier, Trump called India a“dead economy,” with his trade adviser Peter Navarro accusing New Delhi of taking advantage of discounted Russian crude. Trump had also described India's tariffs as“among the highest in the world” and“most strenuous and obnoxious.”

Just days back, he also claimed that New Delhi and Moscow appeared to have been“lost” to China.

Sectors affected by US tariffs

Export-heavy industries are among the worst hit by the Trump tariffs, forcing them to diversify their export markets away from the US. This trade realignment involves moving towards new markets such as the UAE and Qatar, said a Mint report earlier.

Here are some sectors facing the biggest impact:

• Textile and Apparel:

These sectors are among the hardest hit , with duties on knitted apparel going as high as 63.9% and woven apparel at 60.3%. Industry experts have warned that the steep tariffs could slash India's textile and apparel exports to the US by as much as 40–50%, severely affecting the country's $10.3 billion export market, as America remains India's largest export destination for these products, said a Mint report.

India ranks third on the largest supplier list of the US after China and Vietnam.

• Seafood (shrimp):

Seafood and shrimp exporters, in particular, are also affected as the US is a key market for these companies. Reports indicate that Indian shrimp exports currently attract an effective customs duty of 17.7%, which will now increase to 25% under the new tariff regime.

Also Read | India-US BTA talks may resume as Trump, Modi signal thaw after tariff tensions

This has brought down the share price of multiple sea food exporters such as Avanti Feeds and Apex Foods, a news report by Mint noted.

• Agriculture:

Food and agricultural products exporters are also scrambling to find new strategies after Trump's unexpected tariffs on a range of goods proved to be a blow to the country's $50 billion-plus farm shipments, Mint reported.

• Gems and Jewellery:

According to SBI Research, the Gems and Jewellery sector , valued at $10 billion and accounting for 40% of the US market, is severely hit. This could turn out to be an opportunity for countries like Switzerland, where the tariff rate is lower at 39%.

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