Trump’s proposed 500% tariff may hit US consumers harder than exporters

Oil's not well for India's trade

• Trump's 500% tariff may hike US consumer costs more than harm Indian exporters.
• India supplies over 50% of US imports in textiles and packaging.
• India's share in US imports of diamonds and granite is declining.

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US President Donald Trump’s proposed 500 percent tariff on countries that rely on Russian energy could raise costs for American consumers more than it hurts Indian exporters, as trade data shows the US remains dependent on imports from countries such as India for several everyday products, leaving few easy substitutes if duties are raised sharply.

In September, for example, India accounted for more than half of US imports in product categories worth over $500 million, equivalent to roughly 6 percent of India’s total exports to the US that month. In many of these segments, India’s grip is so strong that steep tariffs would almost certainly translate into higher prices on American shelves rather than a swift shift to alternative suppliers.

Take household textiles. In non-printed cotton bed linen, India supplied nearly 59 percent of US imports in September, with shipments valued at about $66.9 million. In table linen, India’s dominance was even sharper, commanding an 81.5 percent share of imports. Packaging materials show a similar pattern: flexible intermediate bulk containers, saw India supplying close to 69 percent of US imports in the same month.

The policy backdrop to these numbers has added to the uncertainty. Last week, US Senator Lindsey Graham said that Trump had given the green light to a bill proposing punitive tariffs of up to 500 percent on countries that continue to import Russian-origin energy. The bill mandates that duties on all goods and services imported into the US from such countries be raised sharply as a deterrent.

The irony is that the US, along with the European Union, South Korea and China, was among the largest importers of Russian uranium in 2024, underlining how complex and intertwined global energy and trade flows remain.

Beyond textiles and packaging, India’s dominance in some niche categories borders on a near-monopoly. In September, India’s share in castor oil stood at 99 percent. Several speciality chemicals and industrial inputs also show India controlling most of the import pie, even after the US imposed a 50 percent tariff on some of these items in August.

Food products further reinforce how embedded India is in the US consumption supply chains. India supplied more than half of the US imports of prepared or preserved cucumbers and gherkins in September and retained a strong position in seafood categories such as shrimps and prawns in airtight containers, where its share was around 56 percent. In such products, supply chains are already built around a limited set of origins, making rapid diversification difficult.

Yet the data also carries a warning signal for India. Its dominance is not uniform, and in some categories it appears to be eroding. In hair products used for wigs, India’s share in September was about 51 percent, well below its roughly 76 percent share over the first seven months of the year. A similar pattern is visible in worked synthetic or reconstructed diamonds, where India’s September share slipped to around 69 percent compared with about 93 percent earlier in the year.

In some big-ticket categories, the fall has been sharper. India’s share in diamond imports dropped to about 22 percent in September from 51 percent over the first seven months of the year. In granite, its share plunged to 9 percent from nearly 48 percent, while in certain stone categories it fell to 31 percent from as high as 88 percent earlier in the year.