STRATEGIES TO TACKLE IMPACT OF US IMPOSED SECONDARY TARIFF

US TARRIFS ON INDIA 

The impact of conditional and persistent trade tariff imposed by Donald Trump's administration is creating much discussion in academics and Policy levels.The secondary 25% punitive tariff and original 25% already existed together imposed by US administration on Indian exports came into effect from 27th August 2025.It has been observed that sectors that will be immediately affected  by tariffs  include textiles, garments gems and jewellery, shrimp,leather and foot wear,animal products, chemicals and electrical and mechanical machinery. It is to be noted that while there is 0% tariff on Pharmaceuticals and smartphones,only 6.9 % on  petroleum, vehicles and parts 26%, adverse impact will be maximum on knitted apparels 63.9%,woven apparels 60.3%, textiles 59%,Organic chemicals 54%,carpets 52.9%,Diamonds and gold 52.1%,Steel Copper and Aluminum 51,7 %,Machinery and mechanical appliances 51.3%.Accordingly the impact will be felt severe on apparels, textiles, organic chemicals, gems and jewellery, copper aluminum, machinery and mechanical appliances etc. While it is obvious that  with imposition of 50% tariff practically trade with US has become impossible,it is bound to affect not only Indian goods exports to US worth billons of dollars but also throwing thousands of workers out of employment.On the  otherhand consumers of Indian goods will adversely affect in terms of increased prices of  a wide range of goods  impacting key sectors like food, clothing and home goods,supply of shrimps and sea food

IMPLICATIONS 

 Analysts observed that exports make up about one fifth of India's GDP. About 20% of that is acounted by exports to USA. Within  that 40% of our exports will not be affected by 50% tariff,Instead severely hit tariff impacted sectors are textiles,apparels ,and leather which in turn belongs to heavily stressed labour intensive and largely dominated by MSME sector. Taking the seriousness of the situation,accordingly Government is devising a multipronged strategy to minimize the impact of  the 50% of US  tariff particularly on labour intensive export sectors like textiles, shrimp, leather, gems and jewellery that are worst affected.On the  contrary Pharmaceuticals, electronics and petroleum products continue to be exempted from onslaught of tariff. Exporters of textiles and apparels in Noida, Telengana and Tiruppur and many parts of the country lakhs of diamond workers in Surat ,marine products exporters from states like Andra Pradesh Tamil Nadu and Kerala have reduced  their  fish output ,particularly shrimp and shrimp farms and farmers and workers are experiencing  negative impact of drastic cut in exports, Same is the case for leather products and foot wear exports.Surat alone major champion is the epicenter of global diamond industry and  the sector itselfs about five million people across the country accounting for nearly 7% of India's GDP and US remained highly dependent on Indian diamonds and Brands.across the  country. Already the exports bodies in the country asked for various supports like interest subsidy, moratorium,,credit support etc.Eventhough China is the largest importer of Russian oil India alone are  blamed for importing oil and  indirectly financing Ukraine war. One study indicated that tariff hike is expected to adversely affect 4038 products where India's price competiveness is adversely  affected 

HOW  TO TACKLE 

Some experts opine  that trade negotiations will resume and US will revert back to the primary 25% tariff.  According to Professor Richard Wolff if you shut off the US to India will have to find other countries to sell its exports,Like Russia found another place to sell its energy .USA's present actions will eventually lead to developing BRICS to be an ever larger more integrated and successful economic alternative to the West with 35% of global GDP which is seven percent higher than G7 countries. US is no longer the hegomonic power.It is a country throwing away much of it history ,"it's the behaviour of a desperate society." Moreover upcoming Shanghai Cooperation Organisation Summit brings adversaries together than having a common enemy.Recent India Japan Economic Security Cooperation Initiative aims to bolster strategic sectors like semiconductors, rare earth's,clean energy, AI,telecom, and bio tech.Japan has committed to mobilise around $68000 billion in private investment in India within a decade. Chief Economic Advisor V Anantha Nageswaran observed that US tariff shock will be short lived and there will be resolution soon.Tariff is likely to impact sectors like textiles, gems and jewellery and marine products beside others. This opportunity is utilised forĺĺķ domestic reforms, deregulation, and GST rate rationalisation. Industry has / plannedt's strategy to absorb some portion of the additional tariffs more specifically gems and jewellery sector.Combined effect of GST rate cut and upcoming festival season is likely to strengthen consumption, investment and  domestic demand in coming quarters .Supply side growth was driven by manufacturing, construction, and services reflecting all round growth. 

CONCLUDING OBSERVATIONS 

Recently the US Appeals Court found that majority of Trump's tariffs derived from powers under the International Emergency Economic Powers (IEEPA) Act  are illegal .The Court allowed the tariffs to remain through October 14 to give Trump administration opportunity to file an appeal with the US Supreme Court.In his second term Trump has made tarrif as a pillar of US foreign policy. Unless either US Supreme Court direct to abolish tariff barriers imposed differently to various countries or US administration itself withdraw illegal tariffs,  employment opportunities of many workers in labour Intensive export units in India like clothing,garments,gems and jewellery, shrimp and marine products in places like Tiruppur, Surat ,Kochi  Coastal districts of Tamil Nadu and Andra Pradesh needs will hit badly. Existing Free Trade Agreement (FTA) with countries  like UK. UAE,Australia etc. can be utilised optimally. The Indian  Prime Minister's participation in the Shanghai Cooperation Organisation (SCO ) is expected to make qualitative and vibrant changes in bilateral and economic relationship with China and other member countries. It can be further extended to relatively strong and upcoming BRICS grouping which can positively increase trade,investment, and transactions with local currencies. Above all Indian exporters should also focus on huge Indian domestic markets and their requirement. Above all either monetary or fiscal measures should be provided to tariff  distressed Micro Small and medium enterprises and workers whose export to US had declined because of tariff war.In any case in the immediate short period some stress and dislocation is bound to affect especially in diamonds, shrimp, and less popular brands.