Millions of India’s shrimp farmers and garment workers are likely to be hit hard by US President Donald Trump’s hike in tariffs on Indian exports to as high as 50 per cent.
The United States is India’s biggest buyer of seafood and textiles, two of its most labour-intensive industries. Together they employ millions of farmers, factory workers and processors whose livelihoods depend on steady US demand.
The 50 per cent US tariff, comprising 25 per cent that kicked in on Aug. 1 and another 25 per cent due to come into force on Aug. 28 as a penalty for India buying Russian oil, is one of the steepest on any of Washington’s trading partners.
The move threatens industries central to India’s export economy, including seafood, textiles, gems and jewellery, auto components, carpets and engineering goods. Some exports like pharmaceutical, smartphones and energy are currently exempt from the tariff.
Shrimp farmers pushed over the edge
The US buys nearly half of India’s US$7 billion of shrimp exports.
The new US tariffs come on top of 7 per cent duties on Indian shrimp that include countervailing duties to offset subsidies given to Indian shrimp producers, and anti-dumping duties to offset dumping of shrimp below fair market value.
With the new 25 per cent reciprocal tariff, the total duty on Indian shrimp has now climbed to more than 30 per cent.
If India fails to avoid the additional 25 per cent penalty for buying Russian oil, the overall tariff on shrimp could climb to nearly 60 per cent on Aug. 28.
Hundreds of thousands of farmers cultivating shrimp in India tend to be impoverished and rely on loans to set up their small businesses, making them particularly vulnerable to falling prices and global shocks.
Farmers warned that higher costs would hit at a time when global oversupply, price drops and disease outbreaks are already squeezing margins, pushing them closer to bankruptcy.
The southern state of Andhra Pradesh, for example, produces close to 70 per cent of India’s shrimp and exports most of it to the United States. Farmers there have invested heavily to cultivate high-quality shrimp in saline ponds.
Now, after the tariff shock, Indian shrimp exporters have slashed the money they offer producers by almost 20 per cent, wiping out most of the farmers’ profits.
By contrast, Ecuador, a key competitor for shrimp, pays far less. Effective US tariffs on Ecuadorian shrimp stand near 18.8 per cent, that includes countervailing duty of 3.7 per cent. As a result, US buyers are shifting orders. Ecuador’s shipments to the United States surged by 44 per cent in June alone, according to S&P Global, a financial services firm.
Textile exporters hit hard
The Indian textile sector provides direct employment to more than 45 million people, many of them women. It is the second-largest employer after agriculture, according to Indian government data.
About a third of India’s textiles and garments flowed to the United States last year, making it the biggest market for apparel exports, according to Indian government data.
With duties rising to nearly 60 per cent, US buyers are already pausing orders, asking Indian suppliers to share the tariff burden and weighing shifts to lower-cost hubs like Bangladesh, Indonesia and Vietnam.
Indian suppliers are also considering shifting their production base to other countries with cheaper tariffs.
Indian exporters say steep tariffs are leading to cancellations of orders as they are uncompetitive compared to Bangladesh and Vietnam, which have US duties of 20 per cent, and China, which has 30 per cent.
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