US Tariffs Impact on Indian Exports & Visa Rules

The trade scene between India and the US is getting heated with a massive 50% tariff on Indian goods announced by US President Donald Trump, shaking things up for exporters and dreamers chasing US opportunities. Our first article broke down the US visa system, its economic perks, and headaches like long waits. The second explored how these tariffs, tied to India’s Russian oil imports, are making visas tougher. This third part focuses on the tariff drama—why it’s happening, which sectors are hit, what’s spared, and how PM Modi’s pushing self-reliance. Despite the strain, a US official sees hope in US-India ties.

What’s the Deal with These Tariffs?

On August 27, 2025, the US imposed a 50% tariff on Indian exports, doubling the 25% levy from July 30 with an additional 25% penalty, targeting India’s purchase of 35-40% of its oil from Russia, which the US claims funds Russia’s actions in Ukraine. This tariff, one of the highest globally, hits India’s $87 billion export market to the US, threatening sectors like textiles, gems and jewelry, shrimp, and auto parts. The Global Trade Research Initiative predicts exports could drop to $50 billion in 2026, endangering lakhs of jobs in Surat’s diamond hubs, Bengaluru’s garment units, and Tamil Nadu’s textile factories. Cotton farmers and shrimp exporters are struggling as their goods face a price disadvantage against competitors like Vietnam, Bangladesh, and China.

India’s pushing back. PM Narendra Modi, speaking in Ahmedabad, vowed to shield farmers and small businesses. On Independence Day, from Delhi’s Red Fort in a saffron turban, he urged shopkeepers to display “Swadeshi” signs, calling for self-reliance with pride. “Economic selfishness is on the rise globally, and we mustn’t sit and cry,” he said. Foreign Minister S. Jaishankar called the tariffs unfair, noting that China and the EU, also importing Russian energy, aren’t targeted. “For India, the US is the largest trading partner,” said MK Venu, founding editor of The Wire, highlighting the $212 billion bilateral trade at risk, with India’s $46 billion surplus under threat.

Which Sectors Are Hit Hardest, and What’s Exempt?

The 50% tariff slams labor-intensive sectors, especially small and medium enterprises:

• Textiles and Apparel: Exports worth $10.8 billion face 63.9% duties. Tiruppur, supporting 600,000 workers, is losing ground to Bangladesh and Vietnam.

• Gems and Jewelry: $9.94 billion in exports face 52.1% duties. Surat’s diamond industry reports layoffs, with some rerouting through Dubai.

• Shrimp and Seafood: $2.4 billion in exports, with 60% duties, are priced out by Ecuador’s 15% tariffed goods. Farmers may halt seeding.

• Auto Parts: $6.6 billion in exports face 25-50% tariffs, losing share to Mexico and Europe.

• Other Sectors: Carpets ($1.2 billion, 52.9% duties), leather, chemicals ($2.7 billion, 54% duties), and agricultural products like rice and spices ($6 billion, 50% duties) face competition from Thailand and Pakistan.

Exemptions: India’s $10.52 billion pharmaceutical exports are spared for now, though Trump pushes for US production. Electronics ($14.64 billion), petroleum ($4.1 billion), steel, aluminum, and niche items like books escape, with $27.6 billion unaffected. These exemptions help, but small firms, making up 70% of exports in textiles, jewelry, and seafood, face job losses.

Modi’s Plan to Soften the Blow

Modi’s promised a “massive tax bonanza” to boost spending. A $12 billion income tax cut was announced earlier, and now he’s pushing a two-tier Goods and Services Tax (GST) system, worth $20 billion, to make goods like scooters, cars, garments, and cement cheaper. Faisal Ahmed, a geopolitics professor, noted this builds on Modi’s COVID-era domestic production push. Consumption drives 60% of India’s economy, but urban spending has slowed due to IT job cuts. Rural areas, buoyed by harvests, hold up, but growth has dipped from 8%. Tax cuts, a 1% interest rate cut, and salary hikes for five million government employees and 6.8 million pensioners aim to spark a spending recovery and lower inflation. Stock markets are rallying, and an S&P Global rating upgrade could attract investment. Exporters will get aid to target markets like Latin America, though MK Venu warned subsidies may fall short, with unclear funding.

A Glimmer of Hope Amidst Tension

US Treasury Secretary Scott Bessent, on August 27, 2025, emphasized the Modi-Trump rapport, seen in the 2019 ‘Howdy, Modi!’ rally. “India is the world’s largest democracy, and the US is the world’s largest economy. We will come together,” he said. A US trade team visits India between August 25 and 30, 2025, and Modi’s UN trip to New York in September could lead to talks. But five rounds of trade talks collapsed, with the US frustrated by India’s 39% agricultural tariffs versus the US’s 4%, and India’s refusal to open farming and dairy sectors. Trump accuses India of “profiteering” from Russian oil, which rose from 1% to 37% of imports since the Ukraine war. India insists its choices meet the needs of 1.4 billion people, accusing the US of selective targeting.

How Tariffs Are Making Visas Tougher

Tariffs are spilling into the visa process, with August 2025 rules adding hurdles.

Temporary Visas

H-1B Visas: Indians took 70% of 85,000 slots in 2024. A ₹20,000 fee pushes costs over ₹1.5 lakh, and no third-party passport pickups mean consulate trips or ₹1,200 for delivery. Social media checks are stricter, and tariff tensions could cut sponsorships, pushing talent to Canada.

F-1 Visas: 1.1 million students, including 270,000 Indians, added $40 billion to the US economy in 2024. F-1 applicants share social media handles, risking rejection. The ₹20,000 fee adds to ₹50-70 lakh tuition, and consulate visits are tough. OPT faces ₹4.5 lakh taxes. F-1 issuances dropped 27%, with 42% of students eyeing Canada or Germany.

B-1/B-2 Visas: Tourism and business visas face year-long waits. The ₹20,000 fee and interviews raise costs, and tariff tensions could increase denials.

Permanent Visas

Family-Based Visas: Spouses get quicker visas, but siblings face 10-20 year waits, with 11 million cases pending. Social media vetting and trade tensions could delay processing.

Employment-Based Visas: EB-2 visas have 1 million backlogged cases for India. EB-5 visas, needing $800,000, are backlogged to 2019. Stricter checks could shrink quotas.

Diversity Lottery and Humanitarian Paths: The lottery’s 55,000 slots are a slim chance. Refugee and asylum cases, with 1.55 million pending, face delays from social media checks.

Why This Feels Unfair

The tariffs and visa rules feel like unfair hurdles. The ₹20,000 fee and social media checks hit hard. The US gains billions from students and workers but targets India while sparing China and the EU. India’s ties with Russia and China, with Modi set to meet Putin, might prompt stricter US policies. Modi’s tax cuts and “Swadeshi” push help, but a weaker rupee makes US costs soar.

What This Means for Global Mobility

Tariffs could cost India ₹4 lakh crore in exports, hitting jobs and affordability of US education. If students from India or Nigeria choose Canada or Germany, the US loses billions and cultural vibrancy like Diwali celebrations. Mexico or Brazil might face visa hurdles if trade disputes spread. Countries like Canada could gain clout. India’s pivot to Russia and China might inspire others to rely less on the US. But Bessent’s optimism and the Modi-Trump bond suggest a deal is possible.

The 50% US tariffs are crushing India’s exports, from Surat’s diamonds to Tamil Nadu’s textiles, while visa rules make US dreams tougher. Modi’s “Swadeshi” push and tax cuts aim to cushion the blow but targeting India stings. Hope from Scott Bessent and the Modi-Trump bond keeps the door open for a deal. These changes could reshape global talent flows. Got a tariff or visa story? Share it at https://www.chaifry.org/ !