From carpets to chemicals, gems & jewellery, experts brace for impact as 50% tariff comes into force

Indian exporters stared at the onset of a new era as US President Donald Trump's additional 25 per cent tariff on imports from India took effect at 9:31 am India time, taking the total levy to 50 per cent. The development comes after the collapse of trade talks between New Delhi and Washington after weeks, and weeks, of negotiations. Many economists say the new tariffs are set to escalate trade tensions between the world's largest and fifth largest economies. 

US 50% tariff on India takes effect at 9:31 am on Wednesday, August 27

A number of businesses and sectors are set to be impacted by the new normal.

List of sectors impacted by Trump's additional 25% tariff

Here's a precise list of some of the sector immediately impacted by the 50 per cent levy: 

• Textiles
• Gems & jewellery
• Shrimp
• Carpets
• Chemicals
• Auto ancillaries

List of sectors unimpacted by total 50% US duty on Indian goods

Here are some of the areas protected or exempted from the new tariffs: 

• Pharmaceutaicals 
  • APIs
  • Medicines
• Electronics 
  • Mobiles
  • Apple supply chain

As a notice by the US Department of Homeland Security confirmed the incoming 25 per cent duty this week, many experts also said that the change has already been factored in by the market. 

Yet, domestic equity benchmarks tumbled about one per cent each amid a broad-based sell-off on Tuesday, led by financial stocks, as investors fretted about the official US notification. The Sensex lost 849.4 points to end at 80,786.5 while the Nifty50 gave up 255.7 points to 24,712.1. Read more

The 50 per cent duty is among Washington's highest on America's trade partners. The additional 25 per cent is for New Delhi's increased buying of Russian oil. India has already made its stand clear on its increasing purchase of Russian oil, stating that it will continue imports despite US pressure. Indian refiners, however, have planned a modest reduction in volumes in the coming months.

Former Foreign Secretary and Rajya Sabha MP Harsh Vardhan Shringla said: "We will be at the receiving end of 50 per cent customs duties for goods exported into the United States from India... We are working on minimising the impact. One way is to find alternative markets. We have Free Trade Agreements with Australia, the UAE, and the UK, we are close to concluding a Free Trade Agreement with the European Union."

"This means that we can access different markets and we would have the opportunity to divert some of our exports in that direction... We have the most comprehensive, multi-faceted relationship with the United States, the one that we have more than any other country... The strength of that relationship are the values and principles that we share, which will see us through any ups and downs in the relationship... The appointment of Sergio Gor as the next US Ambassador to India is a very positive step," said Shringla. 

ALSO READ: Donald Trump names Sergio Gor as next US Ambassador to India

India and the US share two-way trade worth more than $190 billion annually. The disagreement between both sides has raised questions about the wider relationship between India and the US, important security partners that share concerns about China. 

Meanwhile, the rupee dropped to a three-week closing low of 87.68 against the US dollar.