This steep tariff is projected to affect an estimated $48.2 billion worth of Indian exports, raising serious concerns among government officials. Experts fear that this will lead to a significant number of job losses and a slowdown in economic growth. Sectors that are highly labor-intensive, such as textiles, gems and jewelry, leather goods, food, and automobiles, are anticipated to be the hardest hit by this new trade barrier.

The tariff escalation comes amid ongoing and unresolved trade disputes between India and the U.S. A key point of contention has been the U.S. demand for greater access to India’s agriculture and dairy sectors, which has stalled the finalization of a bilateral trade agreement. India, under Prime Minister Narendra Modi, has been firm in its stance to protect its farmers and small businesses, a position that has now led to a major trade fallout.

In response to the new tariffs, the Indian government has initiated efforts to mitigate the economic damage. In addition to a commitment to protecting domestic producers, the administration is focusing on local reforms aimed at boosting domestic consumption. This is a critical strategy to lessen the economic blow from the loss of access to the U.S. market and build greater resilience in the face of external pressures.