According to a bulletin from the U.S. Department of Homeland Security, a 50 % tariff on all Indian-origin goods took effect at 12:01 a.m. ET on 27 August 2025 (12:01 p.m. Beijing time). The duty applies to “all articles imported for consumption or for withdrawal from warehouse for consumption.” Only three narrow exemptions are granted: goods already in transit, humanitarian aid, and certain products covered by reciprocal trade programs.

       The tariff has hit India’s leather and diamond-processing sectors especially hard. U.S. buyers are canceling orders en masse, leaving many factories on the brink of closure.

       Kanpur in Uttar Pradesh—India’s best-known leather hub—is feeling the pain acutely. Dozens of plants that churn out handbags and shoes for the U.S. market have received e-mails from American clients terminating their contracts. Several factories that relied entirely on U.S. orders have already halted production; those still running are scrambling to sell domestically or redirect shipments to other countries.

       Azad, a leather-goods exporter in Kanpur, India: “All our contracts with the United States have been voided. Customers told us to halt every existing order; one U.S. buyer simply said, ‘Stop shipments until the tariff issue is fixed.’ We got the e-mail on 16 August. The situation is dire.”

       The diamond-polishing sector has been hit just as hard. The United States buys roughly one-third of India’s annual gem and jewellery exports—about US$9 billion. According to Reuters, more than 80 % of the world’s rough diamonds are cut and polished in Surat, Gujarat. The new U.S. tariff has compounded an already weak export outlook. Several Surat factories are slashing rough-diamond purchases, running down inventories, cutting working hours and even offering steep discounts to keep cash flowing. Some are also planning to relocate polishing operations to countries facing lower U.S. duties.

       On 26 August, the Federation of Indian Export Organisations warned that the higher tariffs will make about 55 % of Indian exports to the United States “price-uncompetitive.” Leather, chemicals and handicrafts—labour-intensive sectors—have seen the most order cancellations. Large-scale job losses are expected, and the federation is urging the government to provide urgent financial support to exporters.

       Tariff news has pushed the Indian rupee to a three-week low against the dollar and sent local equities sliding. On 26 August the benchmark Sensex 30 fell more than 1 %—its worst day in three months—while foreign investors accelerated their exit. Bloomberg data show August will mark the second straight month of net foreign selling in Indian stocks.

       India’s top U.S.-bound exports are ready-made garments, shrimp, gems and jewellery. According to the U.S. Department of Commerce, bilateral goods trade reached US$128.8 billion in 2024, with India shipping US$87.3 billion to the United States. Indian exporters warn that shipments to America could drop 20–30 % starting in September. Citi estimates the 50 % tariff could shave 0.6–0.8 percentage points off India’s annual GDP growth. ICICI Securities senior economist Abhishek Upadhyay cautions that if the 50 % rate persists, the full-year GDP hit could reach 1 %, with wider repercussions for monetary policy and bond yields.

In a formal statement, India’s Ministry of External Affairs called the measures “unfair, unreasonable and unacceptable,” pledging “all necessary steps to safeguard national interests.” The Ministry of Commerce says affected exporters will receive financial aid and be encouraged to find alternative markets. Looking ahead, Asia Group analyst Nadur notes the trajectory of U.S.–India negotiations will hinge largely on the Trump administration’s policy priorities—both domestic issues and broader geopolitical questions, including those involving Russia.Source: CCTV Finance, Shenzhen Foreign Trade Circle, Wai Xisi Shipping Talk