When the world’s biggest economy changes its trade playbook, everyone feels it — especially India.
New US tariffs on Indian exports are already raising red flags across small manufacturing hubs, from Kanpur’s leather markets to Surat’s textile mills. For a deeper look at how global trade is shifting, read The Tariff Trade-Off: How New Import Taxes are Remaking US Industries.
But here’s the uncomfortable truth: this isn’t just about numbers or trade charts — it’s about jobs, livelihoods, and the survival of small exporters who form India’s economic backbone.
Let’s break it down in Simple language.
Why Are US Tariffs Suddenly a Big Deal?
The US government has started increasing tariffs on several imported goods — part of a broader “America First” trade policy. The goal is to protect domestic manufacturers, but it’s triggering ripples across global supply chains.
For India, the impact of US tariffs is significant because the US is our largest export destination. Roughly 17% of India’s exports head to American shores, according to the Ministry of Commerce. That means when Washington raises import duties, thousands of Indian businesses feel the pinch.
Here’s why:
- Higher duties make Indian goods more expensive in US markets.
- Buyers shift to cheaper alternatives from Vietnam, Mexico, or local US firms.
- Small exporters, who can’t easily find new markets, take the hardest hit.
In short, it’s not just a trade fight – it’s a silent squeeze on India’s competitiveness.
Who’s Hurting the Most? The People Behind the Products
The leather, textile, and garment sectors are on the frontline of this storm. These industries together employ millions of workers — many in small-town clusters like Kanpur, Agra, Surat, and Tiruppur.
Let’s paint a clearer picture:
- Leather exports, worth nearly $5 billion annually, face some of the steepest duties.
- Textile units that once relied on steady US orders are now struggling to keep production lines running.
- Footwear and handicraft makers say buyers are either renegotiating prices or pausing orders entirely.
These are not faceless factories. They’re small workshops, often family-run, where a single export order can sustain dozens of workers. When those orders vanish, it’s not corporate profits that fall — it’s household incomes.
A Ground Reality Check: Jobs on the Line
In Uttar Pradesh’s leather belt, business owners are quietly laying off staff. In Gujarat, small textile units are cutting production shifts to survive. These are not headlines yet — but the tremors are spreading.
A mid-sized exporter recently told The Scribble World:
“My American buyers said they might switch to suppliers in Vietnam. Even a 10% tariff makes them reconsider. I can’t match those prices anymore.”
That 10% might sound small, but when margins are just 5–8%, it’s devastating. Every lost shipment means lost wages, unpaid loans, and families pushed to the edge.
How the Government Is Responding
The Modi government faces a difficult choice. Should it loosen the fiscal belt to help exporters — or stay committed to budget discipline?
Right now, fiscal prudence seems to be winning. Officials have hinted at a small credit package for MSMEs, rather than a sweeping bailout. The reasoning is clear: large subsidies could widen the fiscal deficit and hurt India’s credit ratings.
But there’s a risk here. Without timely relief, smaller exporters — especially those in Tier-2 and Tier-3 towns — may not survive long enough to benefit from broader economic reforms.
The question isn’t whether the government should help — it’s how much support is enough to keep the export ecosystem alive.
Beyond Tariffs: The Domino Effect on the Economy
This tariff shock doesn’t stop at the factory gate. The impact cascades across the economy:
- Currency Weakness: Fewer exports mean fewer dollar inflows — potentially weakening the rupee.
- Employment Crunch: Job losses in export industries can reduce consumer spending.
- Investment Uncertainty: Lower export profits can discourage MSMEs from expanding or modernizing.
Even connected sectors — like logistics, shipping, packaging, and warehousing — face lower demand when export volumes drop.
In global trade, pain travels fast.
Turning Setbacks into Strategy
Every crisis carries opportunity — and India can still turn this around with smart, long-term moves.
Here’s how:
- Diversify export markets. Southeast Asia, Africa, and the Middle East are untapped regions that can offset US dependency.
- Upgrade product value. Move from low-cost goods to premium, niche products like eco-leather and technical textiles.
- Leverage FTAs. Agreements with the EU, Australia, and the UAE can open tariff-free access to new buyers.
The government’s “Make in India for the World” push needs to evolve from a slogan to a survival strategy.
The Global Game of Protectionism
It’s worth remembering — the US isn’t alone.
From Europe’s carbon border tax to China’s export restrictions, protectionism is the new global trend. Every country is building walls around its economy.
The World Trade Organization (WTO) recently warned that increasing tariff barriers could shrink global trade volumes by up to 5% over the next two years — a serious threat for export-led economies.
Read the WTO’s trade outlook here.
For India, this is a wake-up call: global trade is no longer guaranteed. It’s a game of constant adaptation.
The Real Danger: Forgetting Small Exporters
While policymakers debate deficits and diplomacy, the MSME exporters who form India’s industrial base are running out of time.
A two-month delay in credit access can mean permanent closure for many. And every closure doesn’t just erase one business — it dismantles an entire ecosystem of workers, transporters, suppliers, and local economies.
As The Scribble World has highlighted before, it’s these small players — not billion-dollar corporations — who give India its export resilience. Lose them, and you lose the foundation.
Conclusion: Time for Real Trade Resilience
The impact of US tariffs on India is a test of both policy and priorities. India’s challenge isn’t just to respond — it’s to redefine its export strategy for a more volatile world.
Protecting jobs, supporting small exporters, and maintaining fiscal discipline isn’t an easy balance — but it’s one that will shape India’s economic future.
So here’s the question to leave you with:
👉 Should India stick to fiscal prudence, or loosen the purse strings to save its exporters?
Share your take — because trade policy isn’t just about economics anymore. It’s about people.
