Trump Tariffs Hit Indian MSMEs Hard: Textiles, Carpets, Gems & Jewellery Affected

The Indian economy's major labor-intensive sectors, including carpets, gems and jewelry, and handloom, are currently experiencing the impact of the substantial tariffs imposed by US President Donald Trump on Indian commodities.

The imposition of an additional 25% tariff on the import of Indian products by Trump on Wednesday has resulted in an environment of uncertainty and chaos for exporters. The action takes effect before the arrival of US trade negotiators on August 25. The anticipated implementation date for the new levy is August 27, adding to the previously implemented 25% tariffs. Brazil, India, and other nations are currently subject to a 50% tariff imposed by the United States.

"The current situation is one of complete chaos and panic for all individuals." At present, we are anticipating August 27. The constant fluctuations in the dates are not serving the industry well. He laments, "It is an extremely painful period," opines one business owner. 

India is a significant carpet supplier, with a market share of 65–70% in the global carpet market. Sharma asserts that the Indian carpet industry is worth nearly $2 billion, with $1 billion of that value being exported to the United States. "If this trend persists, the $1 billion segment will experience a 50-60% decline," he asserts.

The uncertainty resulting from Trump's 50% tariffs on Indian products is expected to present substantial challenges for India's gems and jewelry industry, in addition to carpets. India's largest market is the United States, which accounts for over $10 billion in gems and jewelry exports and nearly 30% of the industry's total global trade. In the words of Kirit Bhansali, Chairman of the Gems and Jewellery Export Promotion Council (GJEPC), "A blanket tariff of this magnitude is severely devastating for the sector."

However, the ongoing trade disruptions have primarily dampened this sentiment. The handloom industry, home to numerous micro, small, and medium-sized enterprises (MSMEs), serves as a prime example of this. The US was the largest single destination for Indian handloom exports in FY 2024-25, with cargoes valued at Rs 331.56 crore (approx. $39.18 million), according to the Handloom Export Promotion Council (HEPC).