In a historic moment in global trade, US President Donald Trump imposed tariffs on its trading partners on April 2, including India, with 26% “discounted reciprocal tariffs” starting April 29.

"They (India) are charging us 52%, and we charge almost nothing for years and years and decades," Trump stated. He further stated US charges a tariff of 2.4% on motorcycles, whereas India charges 70%, adding India charges 70% tariffs on automobiles.

The announcement has put India at risk when it comes to the key sectors such as textile, engineering, electronics, gems.

“Indian domestic sectors are protected from first-level effects, but Indian textiles, engineering goods, electronics, and gems & jewellery exporters are immediately impacted. Metals are seeing a sell-off this morning, along with oil. Pharma majors are in wait-and-watch mode as sectoral tariffs will be levied on these,” Bagga said.

India's domestic sectors might not be affected just after following the announcement. Exporters could face the increased costs. The abrupt tariff imposition is anticipated to impact India's economy in numerous ways. The higher duties could lead to a fall in Indian exports, eroding margins for exporters, Bagga added, mentioning, “Uncertainty is now converted to a certainty of economic and market pain. The first reaction is to rush into safe havens and to sell risk assets.”

​According to the Gem and Jewellery Export Promotion Council, India exported a total of $32.8 billion worth of gems and jewellery worldwide in the fiscal year 2023-2024 (FY24). Of this, nearly 30%—equivalent to approximately $9.84 billion—was shipped to the United States, making the US the largest destination for India's gems and jewellery exports. ​

"Industry-wide collaboration is crucial to addressing potential challenges. Strengthening design innovation, operational efficiency, and government engagement will be key to sustaining growth despite evolving trade policies,” Financial Express had quoted Colin Shah, MD of Kama Jewellery, as saying, who said US is a crucial market for the sector.

Meanwhile, according to media reports, India is mulling on cutting tariffs on $23 billion worth of US imports, consisting of gems, jewellery, pharmaceuticals, and auto parts, with an aim to soften the impact. However, no deal has been finalised so far.

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