When Global Trade Turns Personal: How U.S. Tariffs Ripple Through India’s Economy

After President Donald Trump was elected in January 2025, the world witnessed multiple tariffs being imposed by his administration, especially on growing and developing countries. India was one of the countries affected by these tariffs. Dissatisfied by India’s continued import of Russian oil and India's involvement in BRICS, Donald Trump imposed a 25% tariff on Indian goods. after India refused to open its agricultural sector to U.S. trade in order to protect its farmers.

These tariffs have affected the Indian economy and also challenged India’s push for self-reliance.

Prime Minister Narendra Modi has continued to encourage self-reliance following the 50% U.S.

tariffs on Indian goods. The U.S. administration stated that the tariffs were meant to punish India for purchasing Russian oil and weapons. Although India and the United States have maintained a fairly strategic relationship, these trade decisions have had serious economic consequences and have also impacted Indian immigrants living in the U.S.

India’s textile and ready-made garment exports recorded a year-on-year decline of 10.1%, while

cotton yarn and fabric exports declined by 11.7%. Millions of jobs in the textile, jewellery, and leather sectors could be affected due to reduced demand. There is also a growing risk of trade imbalance. The United States previously purchased nearly one-fifth of India’s total exports, but this share is now declining.

As a result, Indian exporters are attempting to reduce their dependence on the U.S. market. They are increasingly exploring alternative markets such as neighbouring countries, Bangladesh, China, Spain, and the UAE. However, India’s exports remain significantly dependent on the U.S., which continues to pose a threat to economic stability. To address this, India is working towards diversifying its export markets and strengthening self-reliance in the long run.

Moreover, the United States has repeatedly criticised India’s high tariffs on U.S. agricultural goods,

which sometimes even reach up to 100%. In comparison, India’s tariffs are often much higher than the 5–6% tariffs imposed by the U.S. on Indian goods. India justifies these high tariffs by stating that they are necessary to protect its farmers. However, policies such as globalization have still affected farmers’ growth and stability.

Farmer suicides in India have reached nearly 15,000 cases, driven by factors such as crop failures, rising cultivation costs, and heavy debt. Several scholars argue that multinational companies, particularly from the U.S., have increased farmers’ dependency on expensive inputs, raising costs and financial pressure. However, this direct link remains debated and cannot be stated as the sole cause.

The impact of tariffs is not limited to businesses alone. These trade policies have also affected

students. Rising tariffs and strained trade relations have contributed to higher tuition costs and a

decline in Indian students’ interest in U.S. universities. As a result, many students are now exploring alternative destinations for higher education.

These developments do not affect India alone but also have consequences for the United States. This raises an important question: will such tariffs encourage domestic reliance and strengthen the U.S. economy, or will they have the opposite effect? Several reports suggest that higher tariffs may lead to increased inflation and a decline in overall economic output.

Additionally, stricter trade policies and restrictions have made many immigrants reconsider moving to the U.S. This hesitation could impact the American economy, as immigrants make up around 19% of the U.S. labour force and generated over $1.7 trillion in economic activity in 2023.