Rising Anxiety Amid Tariff Threats: The Impact on India’s Workers
In a striking move, U.S. President Donald Trump has recently escalated tensions by imposing additional tariffs on Indian exports. This decision has set off ripples of anxiety among millions of workers in India, particularly those in the jewelry and textile industries. The threat of economic downturn looms large, and for many, the stakes couldn’t be higher.
The Diamond Industry in Distress
In Gujarat, the heart of India’s diamond polishing sector, the effects of these tariffs are palpable. Jagdish Prajapati, a seasoned diamond worker in Surat, shared his concerns about the future of his trade. For over 20 years, he has been polishing diamonds, yet now he faces uncertainty fueled by economic challenges that date back to the Russia-Ukraine conflict.
“The burden of steep U.S. tariffs on our exports is creating more fear,” Prajapati remarked. With the diamond sector employing between 800,000 and 1 million workers in Gujarat alone, the ramifications of the tariff hike are staggering. Kirit Bhansali, chairman of the Gem & Jewellery Export Promotion Council, highlighted that nearly 30% of the industry’s total global trade, worth over $10 billion, is rooted in U.S. markets. The newly instituted tariff could bring the entire sector to a standstill, putting immense pressure on every tier of the value chain.
The Tariff Landscape
Trump’s decision to implement a staggering total tariff of 50% on Indian goods represents a significant escalation in ongoing trade tensions. Initially set at 25%, the tariff was raised as a response to India’s purchase of Russian oil—deemed a critical factor supporting Russia’s military endeavors in Ukraine. While electronics and pharmaceuticals are currently exempt from these tariffs, many sectors, including gems, textiles, automotive parts, and footwear, will bear the brunt of these economic penalties.
The timing is critical, with the 50% tariff scheduled to take effect on August 27. Amid rising tensions, both countries are now caught in a web of heightened scrutiny and diplomatic complexities. Despite India previously engaging with the Trump administration to double bilateral trade by 2030, these tariffs have strained relations significantly.
Textile Workers Under Pressure
Turning to the textile industry, specifically in Tiruppur, millions are employed in knitwear and garment factories, facing similar fears of job losses. Approximately 30% of Tiruppur’s exports, focused on cotton and knitwear, head to the U.S., contributing around $5.1 billion last financial year. If exports suffer due to the tariff hikes, projections suggest a potential loss of 100,000 to 200,000 jobs in the coming months.
K M Subramanian, president of the Tiruppur Exporters’ Association, encapsulated the industry’s anxiety, noting that the increased costs will make Indian textiles less competitive compared to those from countries like Vietnam and Bangladesh. The once-thriving reputation of Tiruppur for high-quality, eco-friendly knitwear now faces uncertainty.
Kumar Doraiswamy of Eastern Global Clothing candidly articulated the industry’s plight: “With each round of tariffs, we feel we’re being placed in a coma.” The very livelihoods of exporters are jeopardized, navigating the treacherous waters of international trade politics.
Automotive Components Sector at a Crossroads
The automotive parts sector is similarly bracing for impact. Representing around 27% of the $22.9 billion worth of auto components exported from India to the U.S., this segment now faces declining orders due to inflated costs. Vinnie Mehta of the Automotive Component Manufacturers Association acknowledged the grim outlook: “It’s a major headwind, but we are not alone—other competing countries are facing the same fate.”
A Strategic Response: Diversification and Diplomatic Outreach
India is actively seeking ways to navigate these turbulent waters through diplomatic engagement with the U.S., aiming to mitigate the effects of the tariff hikes. Simultaneously, Indian industries are being encouraged to explore new international markets, reducing dependency on U.S. exports.
Experts suggest that the Indian government may need to implement measures such as credit guarantees and loan moratoriums for small and medium enterprises to cushion the economic blow. Furthermore, diversifying trading partners could bolster India’s resilience in the global market.
Prof. Lekha Chakraborty of the National Institute of Public Finance and Policy emphasizes the importance of strategic economic diplomacy. She notes that effective management of interest rates could also attract foreign investment, helping India emerge from this crisis more robust than before.
The unfolding situation presents a complex tableau of economic challenges that not only threaten significant job losses but also stand to reshape the landscape for Indian exports on the global stage.