🌍 U.S. Tariffs and India’s Trade Challenges: Secondary & Tertiary Effects

The Finance Ministry’s recent report highlights a critical concern: while the immediate (primary) impact of U.S. tariffs on Indian exports may not seem alarming, the secondary and tertiary effects will ripple through our economy over time.

With a 50% tariff now in place—up from the earlier 25%—the sectors most vulnerable include:

🧵 Textiles & Clothing

💎 Gems & Jewellery

🦐 Shrimp & Animal Products

🥿 Leather & Footwear

⚙️ Chemicals, Electrical & Mechanical Machinery

These sectors are vital contributors to India’s $48 billion trade with the U.S. The long-term consequences could strain this economic relationship further.

So, what’s the way forward?

Diversification of Trade Profile – Expanding FTAs with the UK, EU, New Zealand, Chile, Peru, and others.

Next-Gen Reforms – Lowering compliance costs, supporting MSMEs, and making ease of doing business a reality.

GST Reforms – Revising slabs to reduce costs and cushion the economy from external shocks.

While diversification is a long-term strategy, immediate reforms and enabling policies will be crucial to safeguard Indian exports and keep our economy resilient.

🔑 Takeaway: The primary effect may be slow, but the secondary and tertiary waves of impact are inevitable. Preparing today through reforms and trade diversification will decide how India weathers this challenge.

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