TARRIF AND IT'S IMPACT

Tariff Impact: India vs U.S.

Clear, side-by-side note describing who was affected, real examples, short-term & long-term effects, and mitigation options.

Prepared: Aug 31, 2025

At a Glance — Summary

A tariff escalation between the United States and India led to mutual losses: India faced export shocks (seafood, textiles, metals); the U.S. saw reduced farm sales (almonds, apples). Competitor countries gained market share.

Key fact: Tariffs acted as a short-term political tool but caused real income & employment losses for producers and workers on both sides.

Quick Impact Table

Who	India	U.S.
Farmers	Shrimp & seafood producers (Odisha): large income loss; rice & pulses exporters also hurt.	California almond & apple growers lost market share; reduced export earnings.
Manufacturing	Textiles, gems, leather, certain auto components faced order drop; MSMEs hit.	Medical devices & electronics exporters lost access to Indian market.
Metals	Steel & aluminium exporters lost competitiveness; regional hubs (Angul) affected.	U.S. importers paid more; some domestic producers temporarily protected.
Workers	Processing plant layoffs (seafood & textiles) and fisherfolk livelihoods at risk (Odisha ~1.5M).	Farm labor & processing sectors faced lower demand, price volatility.
Consumers	Higher prices for U.S. imports (nuts, wine, medical devices).	Higher prices for some Indian imports (textiles, rice); fewer choices.

Detailed, Real Examples

• Shrimp & Seafood (Odisha): Export shipments collapsed (example: exporters cut containers from ~100 to ~25), price falls of ~₹20–30/kg; ~1.5 million coastal livelihoods affected.
• Almonds & Apples (U.S.): U.S. producers faced immediate loss of sales when India imposed retaliatory tariffs; later tariff removal restored access partially.
• Textiles & Gems (India): Orders moved to Bangladesh & Vietnam where tariffs were lower; MSMEs saw cash-flow pressure.
• Aluminium (Odisha): Angul-based producers lost sales to U.S. buyers; longer-term reorientation to alternative markets required.

These examples reflect both direct tariff impositions and secondary effects (buyers relocating orders, currency movements, and logistics disruptions).

Short-term vs Long-term Effects

Short-term (0–12 months)

• Immediate drop in export volumes to affected markets.
• Price volatility and inventory build-up for exporters.
• Layoffs and cash-flow stress for MSMEs and processors.
• Political pressure on governments to respond (retaliatory tariffs, subsidies).

Long-term (1–5 years)

• Market reorientation — buyers shift sourcing to lower-tariff countries.
• Investment decisions postponed or re-routed.
• Potential erosion of competitiveness if protection persists.
• Structural policy shifts: export diversification, trade agreements, and incentives.

Who Wins & Who Loses (Concise)

Losers

• Export-dependent workers & MSMEs in impacted sectors (seafood, textiles).
• Farms reliant on single export markets (almonds, apples).
• Consumers facing higher import prices.

Winners

• Competing exporters from Vietnam, Bangladesh, Ecuador, etc.
• Some domestic firms temporarily protected from foreign competition.
• Import-substitution sectors (short-run gains).

Policy Responses & Mitigation (India & U.S.)

• India: Temporary subsidies, interest-rate support for working capital, safeguard duties, export diversification schemes, finding alternate markets (EU, Middle East, SE Asia).
• U.S.: Relief & compensation for affected farmers (market promotion programs), diplomatic negotiations to remove retaliatory tariffs, targeted trade talks.

Both governments also used diplomatic channels to de-escalate and reopen markets — demonstrating tariffs are often followed by negotiation.

Practical Advice for Stakeholders

• Exporters: Diversify markets (EU, Middle East, ASEAN), upgrade product value, and negotiate long-term contracts with price-adjustment clauses.
• Farmers/Processors: Form cooperatives, access export finance, and add value (processing, cold-chain) to reduce price sensitivity.
• Policymakers: Provide short-term relief, accelerate trade negotiations, and invest in market intelligence & logistics.

Source: Compiled from contemporary reports & trade analyses (2023–2025)

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