India is bracing for a potential export hit of nearly $65 billion following the decision of the United States to impose a steep 50 percent tariff on its merchandise. The new measure, announced through an executive order on August 6 by President Donald Trump, raises the rate from the earlier 25 percent and is set to take effect from August 27.

According to a senior government official, the sectors most at risk include Textiles, Gems and Jewellery and Marine products, all of which have high labour intensity. While some exporters could absorb the initial 25 percent duty, the doubling of the rate has shifted the dynamics sharply. Measures such as easing access to bank credit are being considered to support vulnerable segments.

India exported goods worth $86.51 billion to the US in FY25, making the American market its largest export destination. The finance ministry noted that about 55 percent of Indian shipments to the US are already facing 25 percent reciprocal duties, even before the higher rate takes effect.

Officials caution that the total impact may be softened if ongoing bilateral trade negotiations yield a deal to bring tariffs down. Talks for a trade agreement, which could address the dispute, have been underway, with the most recent round held in July.

While certain goods remain exempt, the government anticipates second- and third-round effects as supply chains adjust, potentially eroding some of the benefits from these exemptions. The next few weeks will be crucial in determining whether diplomacy can prevent a prolonged export disruption.