Patralekha Chatterjee | India's Real Tariff Test: The Human Toll of a Trade War

 India’s migrant workers in export hubs power the country’s global trade -- and now face a crisis they did not create but will have to endure. In a matter of days, US President Donald Trump’s threat of a steep 50 per cent tariff on Indian goods could begin biting, punishing not just exporters but the millions who make India’s export engine run -- the women stitching garments in Tiruppur’s factories, the men polishing diamonds in Surat, the workers gutting shrimp on Kerala’s coast, the migrants assembling auto parts in Ludhiana’s industrial sheds. These are not abstract figures in a spreadsheet; they are the human faces behind every container that leaves India’s ports.

President Trump’s decision to impose an additional 25 per cent penalty on India’s imports over New Delhi’s continued purchases of Russian oil, takes the total duty on most goods to 50 per cent. Unless there is a breakthrough in the coming days, the new duties will take effect on August 27.  August.The staggeringly high tariffs -- ostensibly retaliation for India’s oil imports from Russia -- zero in on labourintensive sectors: textiles, gems and jewellery, seafood and auto parts. These industries are manned disproportionately by rural migrants: men and women who left behind farming, poverty and shrinking opportunities in their home states in exchange for hard, repetitive work in export hubs. For them, even a brief disruption in orders can be catastrophic.

In Tiruppur, India’s knitwear capital, which accounts for one-third of the nation’s apparel exports, the hum of sewing machines is slowing. Not because the 50 per cent tariff has taken effect but because its shadow has already fallen over the factory floor. Tirupur and Coimbatore regions’ garment exports jumped to Rs 45,000 crores ($5.39 billion) in 2024-25. Today, orders are being cancelled preemptively.

Beyond the economic statistics lies a profoundly human story. “India is a major hub in the global apparel industry and the world’s second-largest exporter of apparel. The sector is one of the largest employers in the country, with 45 million people working directly in the industry. Many workers are women. The major garment hubs are in Tiruppur in Tamil Nadu, Bengaluru in Karnataka and Gurgaon in the NCR. A large proportion of women in the ready-made garment sector are first- generation industrial workers and interstate migrants,” said a 2021 report by The Change Alliance, a social impact outfit.

A. Aloysius, founder of Social Awareness and Voluntary Education (SAVE), a Tiruppur-based NGO working on labour rights, told me many workers are young, single, rural women, migrants from Assam, West Bengal and Odisha, and that if the US 50 per cent tariff threat doesn’t change, many employers would lose a big chunk of their business, and would have to reduce staff. Tiruppur’s women migrant workers are typically between 18 and 25. Many are school drop-outs and send money home to their families. They stay in special hostels for women inside factory complexes. Even though their earnings are meagre – Rs 8,000-10,000 a month -- the free accommodation and subsidised meals in canteens at their worksites enable them to send money home. They are not skilled enough to find ready alternatives if they lose their jobs.

“The big fear”, says Mr Aloysius, “is that orders will go to lower-tariff countries like Bangladesh, Vietnam and Cambodia”. The fallout begins with cancelled orders, but it’s the workers in micro, small and medium enterprises (MSMEs) who feel the cut first. The one big hope, he adds, is a pivot to the domestic market. Hopes are also being pinned on the European market.

The crisis doesn’t stop at Tiruppur. Surat in Gujarat, the “Diamond City”, is responsible for cutting and polishing nearly 90 per cent of the world’s rough diamonds. Workers here are predominantly migrants from rural Gujarat, Odisha, Rajasthan and Uttar Pradesh, many with limited education and specialised but low-transferable skills. Many factories in the city have weathered multiple setbacks in recent years. But the US President’s threat of a steep 50 per cent tariff on Indian imports may prove to be the final blow for units, already struggling within the natural diamond industry. Diwali, India’s biggest festival, due in late October this year, typically sees a surge in domestic sales. In recent days, several diamond exporters have publicly voiced concern over orders already being cancelled, and US buyers refusing to offload shipped products, citing the tariff hike.

India’s coastal seafood processing sector, especially in Andhra Pradesh and Kerala, also relies heavily on migrant workers, with a significant proportion being women, who are integral to the industry and vulnerable to the fallout of the recent US tariff hike. These workers predominantly come from poorer states such as Bihar, Odisha and West Bengal. They take on physically demanding, low-paid, seasonal jobs involving sorting, peeling, packing, and freezing shrimp -- work that requires skilled hands and endurance. The looming threat of a 50 per cent tariff by the US has sharply undercut the competitiveness of Indian shrimp exports compared to countries like Ecuador, which faces only a 15 per cent tariff.

Farmers’ leaders and aquaculture industry representatives have announced a phased protest campaign, demanding immediate government action to aid shrimp farmers hit hard by steep US import tariffs on Indian seafood exports. Calls to boycott American brands are rising in India.

The pain could spill over into markets that do not ship a single container -- the affordable housing sector, for one. MSME workers are a core homebuying class in Tier2 and Tier3 cities. Cut their incomes, and the housing demand in places like Coimbatore, Surat and Visakhapatnam collapses.

The lesson of other tariff wars is that optimism alone will not save you -- you need a survival plan for the worst-case scenario, even as you negotiate. That means immediate relief for exporters and their workers: subsidies targeted to affected sectors, emergency workingcapital loans for struggling MSMEs. It means accelerating market diversification so that losing one buyer does not mean losing an industry. Demands from industry associations include direct financial relief, loan moratoriums, renewed export incentives, fast-tracking trade deals, and active government engagement to secure alternative export markets which may not match US volumes, but can offer partial lifelines.

The human cost here cannot be shrugged off as a statistical adjustment in next year’s Economic Survey. A hollowedout workforce, once scattered back into subsistence labour, may never return.

That is why the government, industry and civil society must act in concert: not just to defend export revenues but to defend the people behind them. Fail, and we will have traded away far more than fabrics and gems -- we will have traded away futures.